Correlation Between Bitcoin and Jinlong Machinery

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

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

Diversification Opportunities for Bitcoin and Jinlong Machinery

0.12

Correlation Coefficient

Bitcoin  Jinlong Machinery

Average diversification

The 3 months correlation between Bitcoin and Jinlong is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Jinlong Machinery Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinlong Machinery and Bitcoin 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 are associated (or correlated) with Jinlong Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinlong Machinery has no effect on the direction of Bitcoin i.e., Bitcoin and Jinlong Machinery go up and down completely randomly.

Pair Corralation between Bitcoin and Jinlong Machinery

Assuming the 90 days trading horizon Bitcoin is expected to generate 0.68 times more return on investment than Jinlong Machinery. However, Bitcoin is 1.46 times less risky than Jinlong Machinery. It trades about 0.21 of its potential returns per unit of risk. Jinlong Machinery Electronic is currently generating about 0.05 per unit of risk. If you would invest  6,319,703  in Bitcoin on October 11, 2024 and sell it today you would earn a total of  3,181,291  from holding Bitcoin or generate 50.34% return on investment over 90 days.

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

Bitcoin  vs.  Jinlong Machinery Electronic

Bitcoin

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Jinlong Machinery

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jinlong Machinery Electronic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinlong Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin and Jinlong Machinery

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

The idea behind Bitcoin and Jinlong Machinery Electronic 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.