Correlation Between BSP Financial and BTC Health

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

By analyzing existing cross correlation between BSP Financial Group and BTC Health Limited, you can compare the effects of market volatilities on BSP Financial and BTC Health 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 BSP Financial with a short position of BTC Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSP Financial and BTC Health.

Diversification Opportunities for BSP Financial and BTC Health

-0.58

Correlation Coefficient

BSP Financial  BTC Health

Excellent diversification

The 3 months correlation between BSP and BTC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BSP Financial Group and BTC Health Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Health Limited and BSP Financial 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 BSP Financial Group are associated (or correlated) with BTC Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Health Limited has no effect on the direction of BSP Financial i.e., BSP Financial and BTC Health go up and down completely randomly.

Pair Corralation between BSP Financial and BTC Health

Assuming the 90 days trading horizon BSP Financial Group is expected to generate 0.32 times more return on investment than BTC Health. However, BSP Financial Group is 3.13 times less risky than BTC Health. It trades about 0.19 of its potential returns per unit of risk. BTC Health Limited is currently generating about -0.02 per unit of risk. If you would invest  616.00  in BSP Financial Group on December 20, 2024 and sell it today you would earn a total of  144.00  from holding BSP Financial Group or generate 23.38% return on investment over 90 days.

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

BSP Financial Group  vs.  BTC Health Limited

BSP Financial Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BSP Financial Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, BSP Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

BTC Health Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days BTC Health Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, BTC Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BSP Financial and BTC Health

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

The idea behind BSP Financial Group and BTC Health Limited 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.