Correlation Between SIB and Bitcoin

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

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

Diversification Opportunities for SIB and Bitcoin

0.0

Correlation Coefficient

SIB  Bitcoin

Pay attention - limited upside

The 3 months correlation between SIB and Bitcoin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SIB and Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin and SIB 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 SIB are associated (or correlated) with Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin has no effect on the direction of SIB i.e., SIB and Bitcoin go up and down completely randomly.

Pair Corralation between SIB and Bitcoin

If you would invest (100.00) in SIB on December 29, 2024 and sell it today you would earn a total of  100.00  from holding SIB or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SIB  vs.  Bitcoin

SIB

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, SIB is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin 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 Bitcoin shareholders.

Pair Trading with SIB and Bitcoin

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

The idea behind SIB and Bitcoin 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.