Correlation Between Bitcoin and Ngx Energy

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

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

Diversification Opportunities for Bitcoin and Ngx Energy

-0.14

Correlation Coefficient

Bitcoin  Ngx Energy

Good diversification

The 3 months correlation between Bitcoin and Ngx is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Ngx Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngx Energy International 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 Ngx Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngx Energy International has no effect on the direction of Bitcoin i.e., Bitcoin and Ngx Energy go up and down completely randomly.

Pair Corralation between Bitcoin and Ngx Energy

Assuming the 90 days trading horizon Bitcoin is expected to generate 1.43 times more return on investment than Ngx Energy. However, Bitcoin is 1.43 times more volatile than Ngx Energy International. It trades about 0.1 of its potential returns per unit of risk. Ngx Energy International is currently generating about 0.03 per unit of risk. If you would invest  1,683,716  in Bitcoin on October 9, 2024 and sell it today you would earn a total of  8,539,284  from holding Bitcoin or generate 507.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.76%
Values	Daily Returns

Bitcoin  vs.  Ngx Energy International

Bitcoin

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 20 (%) 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.

Ngx Energy International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ngx Energy International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ngx Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bitcoin and Ngx Energy

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

The idea behind Bitcoin and Ngx Energy International 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.