Correlation Between BTC Health and Medical Developments
Can any of the company-specific risk be diversified away by investing in both BTC Health and Medical Developments 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 Medical Developments 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 Medical Developments International, you can compare the effects of market volatilities on BTC Health and Medical Developments 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 Medical Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTC Health and Medical Developments.
Diversification Opportunities for BTC Health and Medical Developments
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between BTC and Medical is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BTC Health Limited and Medical Developments Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Developments 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 Medical Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Developments has no effect on the direction of BTC Health i.e., BTC Health and Medical Developments go up and down completely randomly.
Pair Corralation between BTC Health and Medical Developments
Assuming the 90 days trading horizon BTC Health Limited is expected to generate 1.22 times more return on investment than Medical Developments. However, BTC Health is 1.22 times more volatile than Medical Developments International. It trades about 0.09 of its potential returns per unit of risk. Medical Developments International is currently generating about -0.04 per unit of risk. If you would invest 2.10 in BTC Health Limited on September 12, 2024 and sell it today you would earn a total of 3.80 from holding BTC Health Limited or generate 180.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BTC Health Limited vs. Medical Developments Internati
Performance |
| Timeline |
| BTC Health Limited |
| Medical Developments |
BTC Health and Medical Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTC Health and Medical Developments
The main advantage of trading using opposite BTC Health and Medical Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTC Health position performs unexpectedly, Medical Developments 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 Medical Developments will offset losses from the drop in Medical Developments' long position.The idea behind BTC Health Limited and Medical Developments International 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.| Medical Developments vs. Centuria Industrial Reit | Medical Developments vs. Oceania Healthcare | Medical Developments vs. GreenX Metals | Medical Developments 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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