Correlation Between Bitcoin and Tata Steel
Can any of the company-specific risk be diversified away by investing in both Bitcoin and Tata Steel 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 Tata Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and Tata Steel Public, you can compare the effects of market volatilities on Bitcoin and Tata Steel 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 Tata Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Tata Steel.
Diversification Opportunities for Bitcoin and Tata Steel
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bitcoin and Tata is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Tata Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tata Steel Public 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 Tata Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tata Steel Public has no effect on the direction of Bitcoin i.e., Bitcoin and Tata Steel go up and down completely randomly.
Pair Corralation between Bitcoin and Tata Steel
Assuming the 90 days trading horizon Bitcoin is expected to generate 0.79 times more return on investment than Tata Steel. However, Bitcoin is 1.27 times less risky than Tata Steel. It trades about 0.07 of its potential returns per unit of risk. Tata Steel Public is currently generating about -0.12 per unit of risk. If you would invest 9,592,837 in Bitcoin on November 2, 2024 and sell it today you would earn a total of 638,163 from holding Bitcoin or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.18% |
| Values | Daily Returns |
Bitcoin vs. Tata Steel Public
Performance |
| Timeline |
| Bitcoin |
| Tata Steel Public |
Bitcoin and Tata Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and Tata Steel
The main advantage of trading using opposite Bitcoin and Tata Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, Tata Steel 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 Tata Steel will offset losses from the drop in Tata Steel's long position.The idea behind Bitcoin and Tata Steel Public 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.| Tata Steel vs. City Steel Public | Tata Steel vs. Prime Office Leasehold | Tata Steel vs. HEMARAJ INDUSTRIAL PROPERTY | Tata Steel vs. Future Park Leasehold |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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