Correlation Between Bitcoin Gold and ZEL

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

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

Diversification Opportunities for Bitcoin Gold and ZEL

-0.25

Correlation Coefficient

Bitcoin Gold  ZEL

Very good diversification

The 3 months correlation between Bitcoin and ZEL is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and ZEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEL and Bitcoin Gold 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 Gold are associated (or correlated) with ZEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEL has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and ZEL go up and down completely randomly.

Pair Corralation between Bitcoin Gold and ZEL

Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 3.59 times less return on investment than ZEL. In addition to that, Bitcoin Gold is 2.36 times more volatile than ZEL. It trades about 0.01 of its total potential returns per unit of risk. ZEL is currently generating about 0.1 per unit of volatility. If you would invest  1.96  in ZEL on November 19, 2024 and sell it today you would earn a total of  6.14  from holding ZEL or generate 313.27% return on investment over 90 days.

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

Bitcoin Gold  vs.  ZEL

Bitcoin Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin Gold 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for Bitcoin Gold shareholders.

ZEL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZEL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, ZEL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bitcoin Gold and ZEL

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

The idea behind Bitcoin Gold and ZEL 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 CEOs Directory module to screen CEOs from public companies around the world.