Correlation Between Bitcoin and Talga Resources

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

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

Diversification Opportunities for Bitcoin and Talga Resources

0.4

Correlation Coefficient

Bitcoin  Talga Resources

Very weak diversification

The 3 months correlation between Bitcoin and Talga is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Talga Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talga 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 Talga Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talga Resources has no effect on the direction of Bitcoin i.e., Bitcoin and Talga Resources go up and down completely randomly.

Pair Corralation between Bitcoin and Talga Resources

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the Talga Resources. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bitcoin is 1.52 times less risky than Talga Resources. The crypto coin trades about -0.09 of its potential returns per unit of risk. The Talga Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Talga Resources on December 21, 2024 and sell it today you would earn a total of  1.00  from holding Talga Resources or generate 2.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Bitcoin  vs.  Talga Resources

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Bitcoin shareholders.

Talga Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Talga Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Talga Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bitcoin and Talga Resources

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

The idea behind Bitcoin and Talga 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.