Correlation Between Value Line and Bit Origin

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

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

Diversification Opportunities for Value Line and Bit Origin

0.85

Correlation Coefficient

Value Line  Bit Origin

Very poor diversification

The 3 months correlation between Value and Bit is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Value Line and Bit Origin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bit Origin and Value Line 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 Value Line are associated (or correlated) with Bit Origin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bit Origin has no effect on the direction of Value Line i.e., Value Line and Bit Origin go up and down completely randomly.

Pair Corralation between Value Line and Bit Origin

Given the investment horizon of 90 days Value Line is expected to generate 0.13 times more return on investment than Bit Origin. However, Value Line is 7.42 times less risky than Bit Origin. It trades about -0.15 of its potential returns per unit of risk. Bit Origin is currently generating about -0.03 per unit of risk. If you would invest  5,304  in Value Line on December 27, 2024 and sell it today you would lose (1,350) from holding Value Line or give up 25.45% of portfolio value over 90 days.

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

Value Line  vs.  Bit Origin

Value Line

Risk-Adjusted Performance

Very Weak

Over the last 90 days Value Line 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 Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bit Origin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bit Origin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Value Line and Bit Origin

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

The idea behind Value Line and Bit Origin 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.