Correlation Between Bitcoin and Entia Biosciences

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

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

Diversification Opportunities for Bitcoin and Entia Biosciences

-0.35

Correlation Coefficient

Bitcoin  Entia Biosciences

Very good diversification

The 3 months correlation between Bitcoin and Entia is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Entia Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entia Biosciences 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 Entia Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entia Biosciences has no effect on the direction of Bitcoin i.e., Bitcoin and Entia Biosciences go up and down completely randomly.

Pair Corralation between Bitcoin and Entia Biosciences

Assuming the 90 days trading horizon Bitcoin is expected to generate 1.35 times more return on investment than Entia Biosciences. However, Bitcoin is 1.35 times more volatile than Entia Biosciences. It trades about 0.09 of its potential returns per unit of risk. Entia Biosciences is currently generating about 0.01 per unit of risk. If you would invest  2,325,278  in Bitcoin on October 26, 2024 and sell it today you would earn a total of  8,135,722  from holding Bitcoin or generate 349.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.84%
Values	Daily Returns

Bitcoin  vs.  Entia Biosciences

Bitcoin

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 15 (%) 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.

Entia Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entia Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bitcoin and Entia Biosciences

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

The idea behind Bitcoin and Entia Biosciences 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.