Correlation Between Idx Risk-managed and Bitcoin Strategy

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

By analyzing existing cross correlation between Idx Risk Managed Bitcoin and Bitcoin Strategy Profund, you can compare the effects of market volatilities on Idx Risk-managed and Bitcoin Strategy 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 Idx Risk-managed with a short position of Bitcoin Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Idx Risk-managed and Bitcoin Strategy.

Diversification Opportunities for Idx Risk-managed and Bitcoin Strategy

0.8

Correlation Coefficient

Idx Risk-managed  Bitcoin Strategy

Very poor diversification

The 3 months correlation between IDX and Bitcoin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Idx Risk Managed Bitcoin and Bitcoin Strategy Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Strategy Profund and Idx Risk-managed 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 Idx Risk Managed Bitcoin are associated (or correlated) with Bitcoin Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Strategy Profund has no effect on the direction of Idx Risk-managed i.e., Idx Risk-managed and Bitcoin Strategy go up and down completely randomly.

Pair Corralation between Idx Risk-managed and Bitcoin Strategy

Assuming the 90 days horizon Idx Risk Managed Bitcoin is expected to under-perform the Bitcoin Strategy. In addition to that, Idx Risk-managed is 1.3 times more volatile than Bitcoin Strategy Profund. It trades about -0.23 of its total potential returns per unit of risk. Bitcoin Strategy Profund is currently generating about -0.05 per unit of volatility. If you would invest  3,333  in Bitcoin Strategy Profund on October 5, 2024 and sell it today you would lose (164.00) from holding Bitcoin Strategy Profund or give up 4.92% of portfolio value over 90 days.

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

Idx Risk Managed Bitcoin  vs.  Bitcoin Strategy Profund

Idx Risk Managed

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Idx Risk Managed Bitcoin are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Idx Risk-managed showed solid returns over the last few months and may actually be approaching a breakup point.

Bitcoin Strategy Profund

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Strategy Profund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Bitcoin Strategy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Idx Risk-managed and Bitcoin Strategy

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

The idea behind Idx Risk Managed Bitcoin and Bitcoin Strategy Profund 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.