Correlation Between Bitcoin and LUMENT FINANCE

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

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

Diversification Opportunities for Bitcoin and LUMENT FINANCE

0.66

Correlation Coefficient

Bitcoin  LUMENT FINANCE

Poor diversification

The 3 months correlation between Bitcoin and LUMENT is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and LUMENT FINANCE TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUMENT FINANCE TR 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 LUMENT FINANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUMENT FINANCE TR has no effect on the direction of Bitcoin i.e., Bitcoin and LUMENT FINANCE go up and down completely randomly.

Pair Corralation between Bitcoin and LUMENT FINANCE

Assuming the 90 days trading horizon Bitcoin is expected to generate 3.18 times more return on investment than LUMENT FINANCE. However, Bitcoin is 3.18 times more volatile than LUMENT FINANCE TR. It trades about 0.08 of its potential returns per unit of risk. LUMENT FINANCE TR is currently generating about 0.05 per unit of risk. If you would invest  2,278,992  in Bitcoin on October 11, 2024 and sell it today you would earn a total of  6,981,707  from holding Bitcoin or generate 306.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	59.48%
Values	Daily Returns

Bitcoin  vs.  LUMENT FINANCE TR

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.

LUMENT FINANCE TR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LUMENT FINANCE TR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LUMENT FINANCE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin and LUMENT FINANCE

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

The idea behind Bitcoin and LUMENT FINANCE TR 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.