Correlation Between IOC and Bitcoin Cash

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

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

Diversification Opportunities for IOC and Bitcoin Cash

0.61

Correlation Coefficient

IOC  Bitcoin Cash

Poor diversification

The 3 months correlation between IOC and Bitcoin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding IOC and Bitcoin Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Cash and IOC 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 IOC are associated (or correlated) with Bitcoin Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Cash has no effect on the direction of IOC i.e., IOC and Bitcoin Cash go up and down completely randomly.

Pair Corralation between IOC and Bitcoin Cash

Assuming the 90 days trading horizon IOC is expected to generate 0.47 times more return on investment than Bitcoin Cash. However, IOC is 2.11 times less risky than Bitcoin Cash. It trades about -0.05 of its potential returns per unit of risk. Bitcoin Cash is currently generating about -0.07 per unit of risk. If you would invest  1.21  in IOC on December 29, 2024 and sell it today you would lose (0.11) from holding IOC or give up 9.09% of portfolio value over 90 days.

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

IOC  vs.  Bitcoin Cash

IOC

Risk-Adjusted Performance

Very Weak

Over the last 90 days IOC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for IOC shareholders.

Bitcoin Cash

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin Cash has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's technical 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 Bitcoin Cash shareholders.

Pair Trading with IOC and Bitcoin Cash

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

The idea behind IOC and Bitcoin Cash 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.