Correlation Between Bitcoin and ARN Media
Can any of the company-specific risk be diversified away by investing in both Bitcoin and ARN Media 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 Bitcoin and ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and ARN Media Limited, you can compare the effects of market volatilities on Bitcoin and ARN Media 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 Bitcoin with a short position of ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and ARN Media.
Diversification Opportunities for Bitcoin and ARN Media
Good diversification
The 3 months correlation between Bitcoin and ARN is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited and Bitcoin 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 Bitcoin are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Bitcoin i.e., Bitcoin and ARN Media go up and down completely randomly.
Pair Corralation between Bitcoin and ARN Media
Assuming the 90 days trading horizon Bitcoin is expected to generate 1.07 times more return on investment than ARN Media. However, Bitcoin is 1.07 times more volatile than ARN Media Limited. It trades about 0.17 of its potential returns per unit of risk. ARN Media Limited is currently generating about -0.26 per unit of risk. If you would invest 9,813,580 in Bitcoin on November 2, 2024 and sell it today you would earn a total of 671,920 from holding Bitcoin or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bitcoin vs. ARN Media Limited
Performance |
| Timeline |
| Bitcoin |
| ARN Media Limited |
Bitcoin and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and ARN Media
The main advantage of trading using opposite Bitcoin and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.The idea behind Bitcoin and ARN Media Limited 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.| ARN Media vs. Austco Healthcare | ARN Media vs. Aeris Environmental | ARN Media vs. Australian Strategic Materials | ARN Media vs. Regal Funds Management |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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