Correlation Between Bank Negara and Auxly Cannabis

Can any of the company-specific risk be diversified away by investing in both Bank Negara and Auxly Cannabis at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bank Negara and Auxly Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank Negara Indonesia and Auxly Cannabis Group, you can compare the effects of market volatilities on Bank Negara and Auxly Cannabis and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bank Negara with a short position of Auxly Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Auxly Cannabis.

Diversification Opportunities for Bank Negara and Auxly Cannabis

0.69

Correlation Coefficient

Bank Negara  Auxly Cannabis

Poor diversification

The 3 months correlation between Bank and Auxly is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Auxly Cannabis Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auxly Cannabis Group and Bank Negara is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bank Negara Indonesia are associated (or correlated) with Auxly Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auxly Cannabis Group has no effect on the direction of Bank Negara i.e., Bank Negara and Auxly Cannabis go up and down completely randomly.

Pair Corralation between Bank Negara and Auxly Cannabis

Assuming the 90 days horizon Bank Negara Indonesia is expected to under-perform the Auxly Cannabis. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Negara Indonesia is 1.85 times less risky than Auxly Cannabis. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Auxly Cannabis Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2.70  in Auxly Cannabis Group on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Auxly Cannabis Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bank Negara Indonesia  vs.  Auxly Cannabis Group

Bank Negara Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Negara Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Auxly Cannabis Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Auxly Cannabis Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Auxly Cannabis may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bank Negara and Auxly Cannabis

The main advantage of trading using opposite Bank Negara and Auxly Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Auxly Cannabis can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Auxly Cannabis will offset losses from the drop in Auxly Cannabis' long position.

The idea behind Bank Negara Indonesia and Auxly Cannabis Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.