Correlation Between Bitfarms and Bullet Blockchain

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

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

Diversification Opportunities for Bitfarms and Bullet Blockchain

0.05

Correlation Coefficient

Bitfarms  Bullet Blockchain

Significant diversification

The 3 months correlation between Bitfarms and Bullet is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bitfarms and Bullet Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bullet Blockchain 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 Bullet Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bullet Blockchain has no effect on the direction of Bitfarms i.e., Bitfarms and Bullet Blockchain go up and down completely randomly.

Pair Corralation between Bitfarms and Bullet Blockchain

Given the investment horizon of 90 days Bitfarms is expected to under-perform the Bullet Blockchain. But the stock apears to be less risky and, when comparing its historical volatility, Bitfarms is 3.06 times less risky than Bullet Blockchain. The stock trades about -0.13 of its potential returns per unit of risk. The Bullet Blockchain is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6.47  in Bullet Blockchain on December 23, 2024 and sell it today you would lose (1.06) from holding Bullet Blockchain or give up 16.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Bitfarms  vs.  Bullet Blockchain

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. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Bullet Blockchain

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bullet Blockchain are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Bullet Blockchain unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitfarms and Bullet Blockchain

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

The idea behind Bitfarms and Bullet Blockchain 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.