Correlation Between Bitcoin SV and IOC

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

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

Diversification Opportunities for Bitcoin SV and IOC

0.96

Correlation Coefficient

Bitcoin SV  IOC

Almost no diversification

The 3 months correlation between Bitcoin and IOC is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin SV and IOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOC and Bitcoin SV 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 Bitcoin SV are associated (or correlated) with IOC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOC has no effect on the direction of Bitcoin SV i.e., Bitcoin SV and IOC go up and down completely randomly.

Pair Corralation between Bitcoin SV and IOC

Assuming the 90 days trading horizon Bitcoin SV is expected to generate 1.0 times less return on investment than IOC. In addition to that, Bitcoin SV is 1.36 times more volatile than IOC. It trades about 0.19 of its total potential returns per unit of risk. IOC is currently generating about 0.26 per unit of volatility. If you would invest  0.73  in IOC on September 4, 2024 and sell it today you would earn a total of  0.51  from holding IOC or generate 69.82% return on investment over 90 days.

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

Bitcoin SV  vs.  IOC

Bitcoin SV

Risk-Adjusted Performance

15 of 100

Good

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

IOC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IOC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, IOC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin SV and IOC

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

The idea behind Bitcoin SV and IOC 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.