Correlation Between BIT Mining and Dream Residential

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

By analyzing existing cross correlation between BIT Mining and Dream Residential Real, you can compare the effects of market volatilities on BIT Mining and Dream Residential 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 BIT Mining with a short position of Dream Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIT Mining and Dream Residential.

Diversification Opportunities for BIT Mining and Dream Residential

-0.24

Correlation Coefficient

BIT Mining  Dream Residential

Very good diversification

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

Pair Corralation between BIT Mining and Dream Residential

Given the investment horizon of 90 days BIT Mining is expected to generate 2.65 times more return on investment than Dream Residential. However, BIT Mining is 2.65 times more volatile than Dream Residential Real. It trades about 0.1 of its potential returns per unit of risk. Dream Residential Real is currently generating about -0.07 per unit of risk. If you would invest  217.00  in BIT Mining on October 8, 2024 and sell it today you would earn a total of  66.00  from holding BIT Mining or generate 30.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BIT Mining  vs.  Dream Residential Real

BIT Mining

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BIT Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, BIT Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Dream Residential Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BIT Mining and Dream Residential

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

The idea behind BIT Mining and Dream Residential Real 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.