Correlation Between Bitcoin Well and OFX Group

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

By analyzing existing cross correlation between Bitcoin Well and OFX Group Ltd, you can compare the effects of market volatilities on Bitcoin Well and OFX Group 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 Well with a short position of OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Well and OFX Group.

Diversification Opportunities for Bitcoin Well and OFX Group

0.11

Correlation Coefficient

Bitcoin Well  OFX Group

Average diversification

The 3 months correlation between Bitcoin and OFX is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Well and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group and Bitcoin Well 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 Well are associated (or correlated) with OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Bitcoin Well i.e., Bitcoin Well and OFX Group go up and down completely randomly.

Pair Corralation between Bitcoin Well and OFX Group

Assuming the 90 days horizon Bitcoin Well is expected to generate 4.9 times more return on investment than OFX Group. However, Bitcoin Well is 4.9 times more volatile than OFX Group Ltd. It trades about 0.02 of its potential returns per unit of risk. OFX Group Ltd is currently generating about -0.13 per unit of risk. If you would invest  12.00  in Bitcoin Well on December 28, 2024 and sell it today you would lose (2.41) from holding Bitcoin Well or give up 20.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Bitcoin Well  vs.  OFX Group Ltd

Bitcoin Well

Risk-Adjusted Performance

Weak

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

OFX Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days OFX Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bitcoin Well and OFX Group

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

The idea behind Bitcoin Well and OFX Group Ltd 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.