Correlation Between Bitcoin and BOC Aviation
Can any of the company-specific risk be diversified away by investing in both Bitcoin and BOC Aviation 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 BOC Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and BOC Aviation Limited, you can compare the effects of market volatilities on Bitcoin and BOC Aviation 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 BOC Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and BOC Aviation.
Diversification Opportunities for Bitcoin and BOC Aviation
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bitcoin and BOC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and BOC Aviation Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOC Aviation 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 BOC Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOC Aviation Limited has no effect on the direction of Bitcoin i.e., Bitcoin and BOC Aviation go up and down completely randomly.
Pair Corralation between Bitcoin and BOC Aviation
Assuming the 90 days trading horizon Bitcoin is expected to generate 2.99 times less return on investment than BOC Aviation. But when comparing it to its historical volatility, Bitcoin is 2.95 times less risky than BOC Aviation. It trades about 0.09 of its potential returns per unit of risk. BOC Aviation Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 770.00 in BOC Aviation Limited on November 2, 2024 and sell it today you would lose (22.00) from holding BOC Aviation Limited or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.03% |
| Values | Daily Returns |
Bitcoin vs. BOC Aviation Limited
Performance |
| Timeline |
| Bitcoin |
| BOC Aviation Limited |
Bitcoin and BOC Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and BOC Aviation
The main advantage of trading using opposite Bitcoin and BOC Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, BOC Aviation 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 BOC Aviation will offset losses from the drop in BOC Aviation's long position.The idea behind Bitcoin and BOC Aviation 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.| BOC Aviation vs. Alta Equipment Group | BOC Aviation vs. Black Diamond Group | BOC Aviation vs. Ashtead Group plc | BOC Aviation vs. African Discovery Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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