Correlation Between Binance Coin and Digia Oyj

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

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

Diversification Opportunities for Binance Coin and Digia Oyj

0.6

Correlation Coefficient

Binance Coin  Digia Oyj

Poor diversification

The 3 months correlation between Binance and Digia is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Digia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digia Oyj and Binance Coin 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 Binance Coin are associated (or correlated) with Digia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digia Oyj has no effect on the direction of Binance Coin i.e., Binance Coin and Digia Oyj go up and down completely randomly.

Pair Corralation between Binance Coin and Digia Oyj

Assuming the 90 days trading horizon Binance Coin is expected to generate 1.91 times more return on investment than Digia Oyj. However, Binance Coin is 1.91 times more volatile than Digia Oyj. It trades about 0.05 of its potential returns per unit of risk. Digia Oyj is currently generating about 0.08 per unit of risk. If you would invest  60,233  in Binance Coin on October 9, 2024 and sell it today you would earn a total of  12,737  from holding Binance Coin or generate 21.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.39%
Values	Daily Returns

Binance Coin  vs.  Digia Oyj

Binance Coin

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Binance Coin are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Binance Coin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Digia Oyj

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digia Oyj are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Digia Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Binance Coin and Digia Oyj

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

The idea behind Binance Coin and Digia Oyj 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.