Correlation Between GRS and Bitcoin Gold

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

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

Diversification Opportunities for GRS and Bitcoin Gold

0.51

Correlation Coefficient

GRS  Bitcoin Gold

Very weak diversification

The 3 months correlation between GRS and Bitcoin is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding GRS and Bitcoin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Gold and GRS 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 GRS are associated (or correlated) with Bitcoin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Gold has no effect on the direction of GRS i.e., GRS and Bitcoin Gold go up and down completely randomly.

Pair Corralation between GRS and Bitcoin Gold

Assuming the 90 days trading horizon GRS is expected to under-perform the Bitcoin Gold. But the crypto coin apears to be less risky and, when comparing its historical volatility, GRS is 15.88 times less risky than Bitcoin Gold. The crypto coin trades about -0.06 of its potential returns per unit of risk. The Bitcoin Gold is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  989.00  in Bitcoin Gold on December 29, 2024 and sell it today you would lose (954.00) from holding Bitcoin Gold or give up 96.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

GRS  vs.  Bitcoin Gold

GRS

Risk-Adjusted Performance

Very Weak

Over the last 90 days GRS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for GRS shareholders.

Bitcoin Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Gold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bitcoin Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRS and Bitcoin Gold

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

The idea behind GRS and Bitcoin Gold 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.