Correlation Between Bitcoin Well and AGBA Acquisition

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

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

Diversification Opportunities for Bitcoin Well and AGBA Acquisition

-0.54

Correlation Coefficient

Bitcoin Well  AGBA Acquisition

Excellent diversification

The 3 months correlation between Bitcoin and AGBA is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Well and AGBA Acquisition Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGBA Acquisition and Bitcoin Well 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 Bitcoin Well are associated (or correlated) with AGBA Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGBA Acquisition has no effect on the direction of Bitcoin Well i.e., Bitcoin Well and AGBA Acquisition go up and down completely randomly.

Pair Corralation between Bitcoin Well and AGBA Acquisition

Assuming the 90 days horizon Bitcoin Well is expected to generate 4.2 times less return on investment than AGBA Acquisition. But when comparing it to its historical volatility, Bitcoin Well is 3.51 times less risky than AGBA Acquisition. It trades about 0.09 of its potential returns per unit of risk. AGBA Acquisition Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5.45  in AGBA Acquisition Limited on September 12, 2024 and sell it today you would earn a total of  15.55  from holding AGBA Acquisition Limited or generate 285.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.56%
Values	Daily Returns

Bitcoin Well  vs.  AGBA Acquisition Limited

Bitcoin Well

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Well are ranked lower than 10 (%) 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.

AGBA Acquisition

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days AGBA Acquisition Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, AGBA Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin Well and AGBA Acquisition

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

The idea behind Bitcoin Well and AGBA Acquisition Limited 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.