Correlation Between BIG Blockchain and Bitfarms

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

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

Diversification Opportunities for BIG Blockchain and Bitfarms

0.38

Correlation Coefficient

BIG Blockchain  Bitfarms

Weak diversification

The 3 months correlation between BIG and Bitfarms is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding BIG Blockchain Intelligence and Bitfarms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitfarms and BIG Blockchain 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 BIG Blockchain Intelligence are associated (or correlated) with Bitfarms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitfarms has no effect on the direction of BIG Blockchain i.e., BIG Blockchain and Bitfarms go up and down completely randomly.

Pair Corralation between BIG Blockchain and Bitfarms

Assuming the 90 days horizon BIG Blockchain is expected to generate 3.48 times less return on investment than Bitfarms. In addition to that, BIG Blockchain is 1.12 times more volatile than Bitfarms. It trades about 0.01 of its total potential returns per unit of risk. Bitfarms is currently generating about 0.04 per unit of volatility. If you would invest  109.00  in Bitfarms on October 10, 2024 and sell it today you would earn a total of  60.00  from holding Bitfarms or generate 55.05% return on investment over 90 days.

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

BIG Blockchain Intelligence  vs.  Bitfarms

BIG Blockchain Intel

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BIG Blockchain Intelligence are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, BIG Blockchain reported solid returns over the last few months and may actually be approaching a breakup point.

Bitfarms

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bitfarms are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Bitfarms may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BIG Blockchain and Bitfarms

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

The idea behind BIG Blockchain Intelligence and Bitfarms 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.