Correlation Between Bitfarms and SATO Technologies

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

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

Diversification Opportunities for Bitfarms and SATO Technologies

0.87

Correlation Coefficient

Bitfarms  SATO Technologies

Very poor diversification

The 3 months correlation between Bitfarms and SATO is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bitfarms and SATO Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SATO Technologies Corp and Bitfarms 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 Bitfarms are associated (or correlated) with SATO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SATO Technologies Corp has no effect on the direction of Bitfarms i.e., Bitfarms and SATO Technologies go up and down completely randomly.

Pair Corralation between Bitfarms and SATO Technologies

Assuming the 90 days trading horizon Bitfarms is expected to under-perform the SATO Technologies. In addition to that, Bitfarms is 1.13 times more volatile than SATO Technologies Corp. It trades about -0.17 of its total potential returns per unit of risk. SATO Technologies Corp is currently generating about -0.08 per unit of volatility. If you would invest  21.00  in SATO Technologies Corp on December 30, 2024 and sell it today you would lose (5.00) from holding SATO Technologies Corp or give up 23.81% of portfolio value over 90 days.

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

Bitfarms  vs.  SATO Technologies Corp

Bitfarms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitfarms has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SATO Technologies Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days SATO Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Bitfarms and SATO Technologies

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

The idea behind Bitfarms and SATO Technologies Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.