Correlation Between Sugarmade and SinglePoint

Can any of the company-specific risk be diversified away by investing in both Sugarmade and SinglePoint 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 Sugarmade and SinglePoint into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sugarmade and SinglePoint, you can compare the effects of market volatilities on Sugarmade and SinglePoint 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 Sugarmade with a short position of SinglePoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sugarmade and SinglePoint.

Diversification Opportunities for Sugarmade and SinglePoint

0.63

Correlation Coefficient

Sugarmade  SinglePoint

Poor diversification

The 3 months correlation between Sugarmade and SinglePoint is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sugarmade and SinglePoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SinglePoint and Sugarmade 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 Sugarmade are associated (or correlated) with SinglePoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SinglePoint has no effect on the direction of Sugarmade i.e., Sugarmade and SinglePoint go up and down completely randomly.

Pair Corralation between Sugarmade and SinglePoint

Given the investment horizon of 90 days Sugarmade is expected to generate 8.18 times more return on investment than SinglePoint. However, Sugarmade is 8.18 times more volatile than SinglePoint. It trades about 0.15 of its potential returns per unit of risk. SinglePoint is currently generating about -0.1 per unit of risk. If you would invest  0.02  in Sugarmade on October 5, 2024 and sell it today you would lose (0.01) from holding Sugarmade or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.21%
Values	Daily Returns

Sugarmade  vs.  SinglePoint

Sugarmade

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sugarmade are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Sugarmade exhibited solid returns over the last few months and may actually be approaching a breakup point.

SinglePoint

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SinglePoint has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly inconsistent basic indicators, SinglePoint reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sugarmade and SinglePoint

The main advantage of trading using opposite Sugarmade and SinglePoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sugarmade position performs unexpectedly, SinglePoint 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 SinglePoint will offset losses from the drop in SinglePoint's long position.

The idea behind Sugarmade and SinglePoint 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.