Correlation Between Bitfarms and Stonex

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

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

Diversification Opportunities for Bitfarms and Stonex

0.37

Correlation Coefficient

Bitfarms  Stonex

Weak diversification

The 3 months correlation between Bitfarms and Stonex is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bitfarms and Stonex Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stonex Group and Bitfarms 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 Bitfarms are associated (or correlated) with Stonex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stonex Group has no effect on the direction of Bitfarms i.e., Bitfarms and Stonex go up and down completely randomly.

Pair Corralation between Bitfarms and Stonex

Given the investment horizon of 90 days Bitfarms is expected to generate 1.04 times less return on investment than Stonex. In addition to that, Bitfarms is 3.69 times more volatile than Stonex Group. It trades about 0.08 of its total potential returns per unit of risk. Stonex Group is currently generating about 0.29 per unit of volatility. If you would invest  8,324  in Stonex Group on September 5, 2024 and sell it today you would earn a total of  2,056  from holding Stonex Group or generate 24.7% return on investment over 90 days.

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

Bitfarms  vs.  Stonex Group

Bitfarms

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bitfarms are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Bitfarms reported solid returns over the last few months and may actually be approaching a breakup point.

Stonex Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stonex Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Stonex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitfarms and Stonex

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

The idea behind Bitfarms and Stonex Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.