Correlation Between BIT Computer and Ecocab

Can any of the company-specific risk be diversified away by investing in both BIT Computer and Ecocab 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 BIT Computer and Ecocab into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BIT Computer Co and Ecocab Co, you can compare the effects of market volatilities on BIT Computer and Ecocab 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 BIT Computer with a short position of Ecocab. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIT Computer and Ecocab.

Diversification Opportunities for BIT Computer and Ecocab

0.27

Correlation Coefficient

BIT Computer  Ecocab

Modest diversification

The 3 months correlation between BIT and Ecocab is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding BIT Computer Co and Ecocab Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecocab and BIT Computer 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 BIT Computer Co are associated (or correlated) with Ecocab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecocab has no effect on the direction of BIT Computer i.e., BIT Computer and Ecocab go up and down completely randomly.

Pair Corralation between BIT Computer and Ecocab

Assuming the 90 days trading horizon BIT Computer Co is expected to under-perform the Ecocab. But the stock apears to be less risky and, when comparing its historical volatility, BIT Computer Co is 3.51 times less risky than Ecocab. The stock trades about -0.01 of its potential returns per unit of risk. The Ecocab Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  139,900  in Ecocab Co on September 13, 2024 and sell it today you would earn a total of  9,100  from holding Ecocab Co or generate 6.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BIT Computer Co  vs.  Ecocab Co

BIT Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BIT Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BIT Computer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ecocab

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ecocab Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ecocab sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BIT Computer and Ecocab

The main advantage of trading using opposite BIT Computer and Ecocab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BIT Computer position performs unexpectedly, Ecocab 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 Ecocab will offset losses from the drop in Ecocab's long position.

The idea behind BIT Computer Co and Ecocab Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.