Correlation Between BTC Health and EROAD
Can any of the company-specific risk be diversified away by investing in both BTC Health and EROAD 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 EROAD 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 EROAD, you can compare the effects of market volatilities on BTC Health and EROAD 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 EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTC Health and EROAD.
Diversification Opportunities for BTC Health and EROAD
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BTC and EROAD is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding BTC Health Limited and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD 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 EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of BTC Health i.e., BTC Health and EROAD go up and down completely randomly.
Pair Corralation between BTC Health and EROAD
Assuming the 90 days trading horizon BTC Health Limited is expected to generate 1.0 times more return on investment than EROAD. However, BTC Health Limited is 1.0 times less risky than EROAD. It trades about 0.15 of its potential returns per unit of risk. EROAD is currently generating about 0.03 per unit of risk. If you would invest 3.70 in BTC Health Limited on October 17, 2024 and sell it today you would earn a total of 3.70 from holding BTC Health Limited or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.32% |
| Values | Daily Returns |
BTC Health Limited vs. EROAD
Performance |
| Timeline |
| BTC Health Limited |
| EROAD |
BTC Health and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTC Health and EROAD
The main advantage of trading using opposite BTC Health and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTC Health position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.| BTC Health vs. Air New Zealand | BTC Health vs. Technology One | BTC Health vs. Mach7 Technologies | BTC Health vs. Maggie Beer Holdings |
| EROAD vs. Kneomedia | EROAD vs. AiMedia Technologies | EROAD vs. BTC Health Limited | EROAD vs. Kip McGrath Education |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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