Correlation Between Bitcoin and 00108WAH3

Can any of the company-specific risk be diversified away by investing in both Bitcoin and 00108WAH3 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 00108WAH3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bitcoin and AEP TEX INC, you can compare the effects of market volatilities on Bitcoin and 00108WAH3 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 00108WAH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and 00108WAH3.

Diversification Opportunities for Bitcoin and 00108WAH3

-0.24

Correlation Coefficient

Bitcoin  00108WAH3

Very good diversification

The 3 months correlation between Bitcoin and 00108WAH3 is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC 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 00108WAH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of Bitcoin i.e., Bitcoin and 00108WAH3 go up and down completely randomly.

Pair Corralation between Bitcoin and 00108WAH3

Assuming the 90 days trading horizon Bitcoin is expected to generate 4.59 times more return on investment than 00108WAH3. However, Bitcoin is 4.59 times more volatile than AEP TEX INC. It trades about -0.01 of its potential returns per unit of risk. AEP TEX INC is currently generating about -0.27 per unit of risk. If you would invest  8,860,926  in Bitcoin on December 25, 2024 and sell it today you would lose (115,870) from holding Bitcoin or give up 1.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Bitcoin  vs.  AEP TEX INC

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 latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Bitcoin shareholders.

AEP TEX INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days AEP TEX INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAH3 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bitcoin and 00108WAH3

The main advantage of trading using opposite Bitcoin and 00108WAH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, 00108WAH3 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 00108WAH3 will offset losses from the drop in 00108WAH3's long position.

The idea behind Bitcoin and AEP TEX INC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.