Correlation Between BITM and NANO

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

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

Diversification Opportunities for BITM and NANO

0.32

Correlation Coefficient

BITM  NANO

Weak diversification

The 3 months correlation between BITM and NANO is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BITM and NANO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NANO and BITM 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 BITM are associated (or correlated) with NANO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NANO has no effect on the direction of BITM i.e., BITM and NANO go up and down completely randomly.

Pair Corralation between BITM and NANO

If you would invest  85.00  in NANO on September 1, 2024 and sell it today you would earn a total of  54.00  from holding NANO or generate 63.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.54%
Values	Daily Returns

BITM  vs.  NANO

BITM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BITM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BITM is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

NANO

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NANO are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, NANO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BITM and NANO

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

The idea behind BITM and NANO 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.