Correlation Between Bitcoin and Riedel Resources

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

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

Diversification Opportunities for Bitcoin and Riedel Resources

-0.01

Correlation Coefficient

Bitcoin  Riedel Resources

Good diversification

The 3 months correlation between Bitcoin and Riedel is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Riedel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riedel Resources 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 Riedel Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riedel Resources has no effect on the direction of Bitcoin i.e., Bitcoin and Riedel Resources go up and down completely randomly.

Pair Corralation between Bitcoin and Riedel Resources

Assuming the 90 days trading horizon Bitcoin is expected to generate 0.2 times more return on investment than Riedel Resources. However, Bitcoin is 5.01 times less risky than Riedel Resources. It trades about 0.12 of its potential returns per unit of risk. Riedel Resources is currently generating about -0.26 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	90.0%
Values	Daily Returns

Bitcoin  vs.  Riedel Resources

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.

Riedel Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Riedel Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Riedel Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin and Riedel Resources

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

The idea behind Bitcoin and Riedel Resources 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.