Correlation Between BitFuFu and Bit Digital

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

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

Diversification Opportunities for BitFuFu and Bit Digital

0.62

Correlation Coefficient

BitFuFu  Bit Digital

Poor diversification

The 3 months correlation between BitFuFu and Bit is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BitFuFu Class A and Bit Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bit Digital and BitFuFu 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 BitFuFu Class A are associated (or correlated) with Bit Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bit Digital has no effect on the direction of BitFuFu i.e., BitFuFu and Bit Digital go up and down completely randomly.

Pair Corralation between BitFuFu and Bit Digital

Given the investment horizon of 90 days BitFuFu Class A is expected to generate 0.93 times more return on investment than Bit Digital. However, BitFuFu Class A is 1.08 times less risky than Bit Digital. It trades about 0.02 of its potential returns per unit of risk. Bit Digital is currently generating about -0.06 per unit of risk. If you would invest  502.00  in BitFuFu Class A on December 28, 2024 and sell it today you would lose (10.00) from holding BitFuFu Class A or give up 1.99% of portfolio value over 90 days.

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

BitFuFu Class A  vs.  Bit Digital

BitFuFu Class A

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BitFuFu Class A are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, BitFuFu is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bit Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bit Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BitFuFu and Bit Digital

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

The idea behind BitFuFu Class A and Bit Digital 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.