Correlation Between Barloworld and Grayscale Bitcoin

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

By analyzing existing cross correlation between Barloworld Ltd ADR and Grayscale Bitcoin Cash, you can compare the effects of market volatilities on Barloworld and Grayscale 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 Barloworld with a short position of Grayscale Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Grayscale Bitcoin.

Diversification Opportunities for Barloworld and Grayscale Bitcoin

0.12

Correlation Coefficient

Barloworld  Grayscale Bitcoin

Average diversification

The 3 months correlation between Barloworld and Grayscale is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Grayscale Bitcoin Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Bitcoin Cash and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Grayscale Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Bitcoin Cash has no effect on the direction of Barloworld i.e., Barloworld and Grayscale Bitcoin go up and down completely randomly.

Pair Corralation between Barloworld and Grayscale Bitcoin

Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 0.64 times more return on investment than Grayscale Bitcoin. However, Barloworld Ltd ADR is 1.56 times less risky than Grayscale Bitcoin. It trades about 0.09 of its potential returns per unit of risk. Grayscale Bitcoin Cash is currently generating about -0.03 per unit of risk. If you would invest  418.00  in Barloworld Ltd ADR on September 21, 2024 and sell it today you would earn a total of  172.00  from holding Barloworld Ltd ADR or generate 41.15% return on investment over 90 days.

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

Barloworld Ltd ADR  vs.  Grayscale Bitcoin Cash

Barloworld ADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barloworld Ltd ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Barloworld showed solid returns over the last few months and may actually be approaching a breakup point.

Grayscale Bitcoin Cash

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Cash are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Grayscale Bitcoin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barloworld and Grayscale Bitcoin

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

The idea behind Barloworld Ltd ADR and Grayscale Bitcoin Cash 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.