Correlation Between Bittensor and NPXS

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

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

Diversification Opportunities for Bittensor and NPXS

-0.74

Correlation Coefficient

Bittensor  NPXS

Pay attention - limited upside

The 3 months correlation between Bittensor and NPXS is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bittensor and NPXS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NPXS and Bittensor 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 Bittensor are associated (or correlated) with NPXS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NPXS has no effect on the direction of Bittensor i.e., Bittensor and NPXS go up and down completely randomly.

Pair Corralation between Bittensor and NPXS

Assuming the 90 days trading horizon Bittensor is expected to generate 0.95 times more return on investment than NPXS. However, Bittensor is 1.06 times less risky than NPXS. It trades about 0.19 of its potential returns per unit of risk. NPXS is currently generating about -0.14 per unit of risk. If you would invest  28,132  in Bittensor on August 30, 2024 and sell it today you would earn a total of  28,287  from holding Bittensor or generate 100.55% return on investment over 90 days.

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

Bittensor  vs.  NPXS

Bittensor

Risk-Adjusted Performance

14 of 100

Good

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

NPXS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NPXS 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 fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for NPXS shareholders.

Pair Trading with Bittensor and NPXS

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

The idea behind Bittensor and NPXS 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.

Check out your portfolio center.

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.