Correlation Between BTC Digital and FormFactor

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

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

Diversification Opportunities for BTC Digital and FormFactor

-0.61

Correlation Coefficient

BTC Digital  FormFactor

Excellent diversification

The 3 months correlation between BTC and FormFactor is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BTC Digital and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor and BTC Digital 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 BTC Digital are associated (or correlated) with FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of BTC Digital i.e., BTC Digital and FormFactor go up and down completely randomly.

Pair Corralation between BTC Digital and FormFactor

Given the investment horizon of 90 days BTC Digital is expected to generate 12.87 times more return on investment than FormFactor. However, BTC Digital is 12.87 times more volatile than FormFactor. It trades about 0.17 of its potential returns per unit of risk. FormFactor is currently generating about -0.04 per unit of risk. If you would invest  145.00  in BTC Digital on September 2, 2024 and sell it today you would earn a total of  1,443  from holding BTC Digital or generate 995.17% return on investment over 90 days.

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

BTC Digital  vs.  FormFactor

BTC Digital

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTC Digital are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, BTC Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

FormFactor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FormFactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with BTC Digital and FormFactor

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

The idea behind BTC Digital and FormFactor 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 Stocks Directory module to find actively traded stocks across global markets.