Correlation Between Bitcoin and Philippine Seven

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

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

Diversification Opportunities for Bitcoin and Philippine Seven

-0.58

Correlation Coefficient

Bitcoin  Philippine Seven

Excellent diversification

The 3 months correlation between Bitcoin and Philippine is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Philippine Seven Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philippine Seven Corp 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 Philippine Seven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philippine Seven Corp has no effect on the direction of Bitcoin i.e., Bitcoin and Philippine Seven go up and down completely randomly.

Pair Corralation between Bitcoin and Philippine Seven

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the Philippine Seven. In addition to that, Bitcoin is 1.96 times more volatile than Philippine Seven Corp. It trades about -0.02 of its total potential returns per unit of risk. Philippine Seven Corp is currently generating about 0.04 per unit of volatility. If you would invest  6,750  in Philippine Seven Corp on October 10, 2024 and sell it today you would earn a total of  50.00  from holding Philippine Seven Corp or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.82%
Values	Daily Returns

Bitcoin  vs.  Philippine Seven Corp

Bitcoin

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 16 (%) 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.

Philippine Seven Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Philippine Seven Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Philippine Seven is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bitcoin and Philippine Seven

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

The idea behind Bitcoin and Philippine Seven Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.