Correlation Between REDLANG and BounceBit
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By analyzing existing cross correlation between REDLANG and BounceBit, you can compare the effects of market volatilities on REDLANG and BounceBit 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 REDLANG with a short position of BounceBit. Check out your portfolio center. Please also check ongoing floating volatility patterns of REDLANG and BounceBit.
Diversification Opportunities for REDLANG and BounceBit
Weak diversification
The 3 months correlation between REDLANG and BounceBit is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding REDLANG and BounceBit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BounceBit and REDLANG 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 REDLANG are associated (or correlated) with BounceBit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BounceBit has no effect on the direction of REDLANG i.e., REDLANG and BounceBit go up and down completely randomly.
Pair Corralation between REDLANG and BounceBit
Assuming the 90 days trading horizon REDLANG is expected to generate 1.71 times less return on investment than BounceBit. But when comparing it to its historical volatility, REDLANG is 1.15 times less risky than BounceBit. It trades about 0.22 of its potential returns per unit of risk. BounceBit is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 26.00 in BounceBit on September 4, 2024 and sell it today you would earn a total of 14.00 from holding BounceBit or generate 53.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REDLANG vs. BounceBit
Performance |
| Timeline |
| REDLANG |
| BounceBit |
REDLANG and BounceBit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REDLANG and BounceBit
The main advantage of trading using opposite REDLANG and BounceBit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REDLANG position performs unexpectedly, BounceBit 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 BounceBit will offset losses from the drop in BounceBit's long position.The idea behind REDLANG and BounceBit 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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