Correlation Between Cal Bay and First BITCoin

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

By analyzing existing cross correlation between Cal Bay Intl and First BITCoin Capital, you can compare the effects of market volatilities on Cal Bay and First 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 Cal Bay with a short position of First BITCoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal Bay and First BITCoin.

Diversification Opportunities for Cal Bay and First BITCoin

1.0

Correlation Coefficient

Cal Bay  First BITCoin

No risk reduction

The 3 months correlation between Cal and First is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Cal Bay Intl and First BITCoin Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First BITCoin Capital and Cal Bay 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 Cal Bay Intl are associated (or correlated) with First BITCoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First BITCoin Capital has no effect on the direction of Cal Bay i.e., Cal Bay and First BITCoin go up and down completely randomly.

Pair Corralation between Cal Bay and First BITCoin

Given the investment horizon of 90 days Cal Bay is expected to generate 1.84 times less return on investment than First BITCoin. But when comparing it to its historical volatility, Cal Bay Intl is 1.39 times less risky than First BITCoin. It trades about 0.08 of its potential returns per unit of risk. First BITCoin Capital is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.06  in First BITCoin Capital on September 12, 2024 and sell it today you would lose (0.05) from holding First BITCoin Capital or give up 83.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.7%
Values	Daily Returns

Cal Bay Intl  vs.  First BITCoin Capital

Cal Bay Intl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cal Bay Intl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

First BITCoin Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First BITCoin Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, First BITCoin is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cal Bay and First BITCoin

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

The idea behind Cal Bay Intl and First BITCoin Capital 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.