Correlation Between SATO Technologies and Bitfarms

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

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

Diversification Opportunities for SATO Technologies and Bitfarms

0.69

Correlation Coefficient

SATO Technologies  Bitfarms

Poor diversification

The 3 months correlation between SATO and Bitfarms is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SATO Technologies Corp and Bitfarms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitfarms and SATO Technologies 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 SATO Technologies Corp are associated (or correlated) with Bitfarms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitfarms has no effect on the direction of SATO Technologies i.e., SATO Technologies and Bitfarms go up and down completely randomly.

Pair Corralation between SATO Technologies and Bitfarms

Assuming the 90 days trading horizon SATO Technologies is expected to generate 3.1 times less return on investment than Bitfarms. In addition to that, SATO Technologies is 1.49 times more volatile than Bitfarms. It trades about 0.01 of its total potential returns per unit of risk. Bitfarms is currently generating about 0.05 per unit of volatility. If you would invest  262.00  in Bitfarms on September 4, 2024 and sell it today you would earn a total of  25.00  from holding Bitfarms or generate 9.54% return on investment over 90 days.

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

SATO Technologies Corp  vs.  Bitfarms

SATO Technologies Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days SATO Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SATO Technologies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Bitfarms

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bitfarms are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bitfarms displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SATO Technologies and Bitfarms

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

The idea behind SATO Technologies Corp and Bitfarms 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.