Correlation Between Bitcoin and Budimex SA

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

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

Diversification Opportunities for Bitcoin and Budimex SA

-0.63

Correlation Coefficient

Bitcoin  Budimex SA

Excellent diversification

The 3 months correlation between Bitcoin and Budimex is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Budimex SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Budimex SA 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 Budimex SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Budimex SA has no effect on the direction of Bitcoin i.e., Bitcoin and Budimex SA go up and down completely randomly.

Pair Corralation between Bitcoin and Budimex SA

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the Budimex SA. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bitcoin is 1.01 times less risky than Budimex SA. The crypto coin trades about -0.09 of its potential returns per unit of risk. The Budimex SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  47,340  in Budimex SA on December 23, 2024 and sell it today you would earn a total of  13,810  from holding Budimex SA or generate 29.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.31%
Values	Daily Returns

Bitcoin  vs.  Budimex SA

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Bitcoin shareholders.

Budimex SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Budimex SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Budimex SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin and Budimex SA

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

The idea behind Bitcoin and Budimex SA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..