Correlation Between Argo Blockchain and Bitcoin Well

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

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

Diversification Opportunities for Argo Blockchain and Bitcoin Well

-0.36

Correlation Coefficient

Argo Blockchain  Bitcoin Well

Very good diversification

The 3 months correlation between Argo and Bitcoin is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Argo Blockchain PLC and Bitcoin Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Well and Argo Blockchain 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 Argo Blockchain PLC are associated (or correlated) with Bitcoin Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Well has no effect on the direction of Argo Blockchain i.e., Argo Blockchain and Bitcoin Well go up and down completely randomly.

Pair Corralation between Argo Blockchain and Bitcoin Well

Given the investment horizon of 90 days Argo Blockchain PLC is expected to under-perform the Bitcoin Well. But the stock apears to be less risky and, when comparing its historical volatility, Argo Blockchain PLC is 1.99 times less risky than Bitcoin Well. The stock trades about -0.12 of its potential returns per unit of risk. The Bitcoin Well is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6.95  in Bitcoin Well on September 30, 2024 and sell it today you would earn a total of  4.05  from holding Bitcoin Well or generate 58.27% return on investment over 90 days.

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

Argo Blockchain PLC  vs.  Bitcoin Well

Argo Blockchain PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argo Blockchain PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bitcoin Well

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Well are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bitcoin Well reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Argo Blockchain and Bitcoin Well

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

The idea behind Argo Blockchain PLC and Bitcoin Well 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.