Correlation Between Bayside Corp and Cathedra Bitcoin

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

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

Diversification Opportunities for Bayside Corp and Cathedra Bitcoin

0.02

Correlation Coefficient

Bayside Corp  Cathedra Bitcoin

Significant diversification

The 3 months correlation between Bayside and Cathedra is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bayside Corp and Cathedra Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathedra Bitcoin and Bayside Corp 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 Bayside Corp are associated (or correlated) with Cathedra Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathedra Bitcoin has no effect on the direction of Bayside Corp i.e., Bayside Corp and Cathedra Bitcoin go up and down completely randomly.

Pair Corralation between Bayside Corp and Cathedra Bitcoin

Given the investment horizon of 90 days Bayside Corp is expected to generate 1.7 times more return on investment than Cathedra Bitcoin. However, Bayside Corp is 1.7 times more volatile than Cathedra Bitcoin. It trades about 0.01 of its potential returns per unit of risk. Cathedra Bitcoin is currently generating about -0.08 per unit of risk. If you would invest  100.00  in Bayside Corp on December 21, 2024 and sell it today you would lose (34.00) from holding Bayside Corp or give up 34.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Bayside Corp  vs.  Cathedra Bitcoin

Bayside Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bayside Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bayside Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Cathedra Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cathedra Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bayside Corp and Cathedra Bitcoin

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

The idea behind Bayside Corp and Cathedra Bitcoin 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.