Correlation Between Bitcoin and JPM China

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

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

Diversification Opportunities for Bitcoin and JPM China

-0.2

Correlation Coefficient

Bitcoin  JPM China

Good diversification

The 3 months correlation between Bitcoin and JPM is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and JPM China A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM China A 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 JPM China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM China A has no effect on the direction of Bitcoin i.e., Bitcoin and JPM China go up and down completely randomly.

Pair Corralation between Bitcoin and JPM China

Assuming the 90 days trading horizon Bitcoin is expected to generate 1.67 times more return on investment than JPM China. However, Bitcoin is 1.67 times more volatile than JPM China A. It trades about 0.12 of its potential returns per unit of risk. JPM China A is currently generating about -0.39 per unit of risk. If you would invest  9,665,788  in Bitcoin on October 9, 2024 and sell it today you would earn a total of  557,212  from holding Bitcoin or generate 5.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Bitcoin  vs.  JPM China A

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.

JPM China A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPM China A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Bitcoin and JPM China

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

The idea behind Bitcoin and JPM China A 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.