Correlation Between BTC Health and Ecofibre
Can any of the company-specific risk be diversified away by investing in both BTC Health and Ecofibre 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 BTC Health and Ecofibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTC Health Limited and Ecofibre, you can compare the effects of market volatilities on BTC Health and Ecofibre 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 BTC Health with a short position of Ecofibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTC Health and Ecofibre.
Diversification Opportunities for BTC Health and Ecofibre
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between BTC and Ecofibre is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BTC Health Limited and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre and BTC Health 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 BTC Health Limited are associated (or correlated) with Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of BTC Health i.e., BTC Health and Ecofibre go up and down completely randomly.
Pair Corralation between BTC Health and Ecofibre
Assuming the 90 days trading horizon BTC Health Limited is expected to generate 0.82 times more return on investment than Ecofibre. However, BTC Health Limited is 1.22 times less risky than Ecofibre. It trades about 0.29 of its potential returns per unit of risk. Ecofibre is currently generating about -0.36 per unit of risk. If you would invest 5.50 in BTC Health Limited on September 14, 2024 and sell it today you would earn a total of 1.20 from holding BTC Health Limited or generate 21.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BTC Health Limited vs. Ecofibre
Performance |
| Timeline |
| BTC Health Limited |
| Ecofibre |
BTC Health and Ecofibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTC Health and Ecofibre
The main advantage of trading using opposite BTC Health and Ecofibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTC Health position performs unexpectedly, Ecofibre 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 Ecofibre will offset losses from the drop in Ecofibre's long position.| BTC Health vs. Talisman Mining | BTC Health vs. Red Hill Iron | BTC Health vs. M3 Mining | BTC Health vs. Chalice Mining Limited |
| Ecofibre vs. Capitol Health | Ecofibre vs. Leeuwin Metals | Ecofibre vs. Sonic Healthcare | Ecofibre vs. BTC Health Limited |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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