Correlation Between Bitcoin and Ferrum SA
Can any of the company-specific risk be diversified away by investing in both Bitcoin and Ferrum SA 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 Ferrum SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and Ferrum SA, you can compare the effects of market volatilities on Bitcoin and Ferrum SA 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 Ferrum SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Ferrum SA.
Diversification Opportunities for Bitcoin and Ferrum SA
Excellent diversification
The 3 months correlation between Bitcoin and Ferrum is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Ferrum SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrum SA 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 Ferrum SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrum SA has no effect on the direction of Bitcoin i.e., Bitcoin and Ferrum SA go up and down completely randomly.
Pair Corralation between Bitcoin and Ferrum SA
Assuming the 90 days trading horizon Bitcoin is expected to generate 0.87 times more return on investment than Ferrum SA. However, Bitcoin is 1.15 times less risky than Ferrum SA. It trades about 0.17 of its potential returns per unit of risk. Ferrum SA is currently generating about 0.09 per unit of risk. If you would invest 9,860,693 in Bitcoin on October 24, 2024 and sell it today you would earn a total of 732,107 from holding Bitcoin or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Bitcoin vs. Ferrum SA
Performance |
| Timeline |
| Bitcoin |
| Ferrum SA |
Bitcoin and Ferrum SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and Ferrum SA
The main advantage of trading using opposite Bitcoin and Ferrum SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, Ferrum SA 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 Ferrum SA will offset losses from the drop in Ferrum SA's long position.The idea behind Bitcoin and Ferrum SA 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.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 CEOs Directory module to screen CEOs from public companies around the world.
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