Correlation Between Arcane Crypto and Athena Bitcoin

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

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

Diversification Opportunities for Arcane Crypto and Athena Bitcoin

-0.26

Correlation Coefficient

Arcane Crypto  Athena Bitcoin

Very good diversification

The 3 months correlation between Arcane and Athena is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Arcane Crypto AB and Athena Bitcoin Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athena Bitcoin Global and Arcane Crypto 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 Arcane Crypto AB are associated (or correlated) with Athena Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athena Bitcoin Global has no effect on the direction of Arcane Crypto i.e., Arcane Crypto and Athena Bitcoin go up and down completely randomly.

Pair Corralation between Arcane Crypto and Athena Bitcoin

Assuming the 90 days horizon Arcane Crypto AB is expected to generate 4.87 times more return on investment than Athena Bitcoin. However, Arcane Crypto is 4.87 times more volatile than Athena Bitcoin Global. It trades about 0.07 of its potential returns per unit of risk. Athena Bitcoin Global is currently generating about 0.04 per unit of risk. If you would invest  0.01  in Arcane Crypto AB on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Arcane Crypto AB or generate 0.0% return on investment over 90 days.

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

Arcane Crypto AB  vs.  Athena Bitcoin Global

Arcane Crypto AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Athena Bitcoin Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Athena Bitcoin Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward indicators, Athena Bitcoin unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arcane Crypto and Athena Bitcoin

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

The idea behind Arcane Crypto AB and Athena Bitcoin Global 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.