Correlation Between BTC Health and Dexus Convenience

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

By analyzing existing cross correlation between BTC Health Limited and Dexus Convenience Retail, you can compare the effects of market volatilities on BTC Health and Dexus Convenience 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 BTC Health with a short position of Dexus Convenience. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTC Health and Dexus Convenience.

Diversification Opportunities for BTC Health and Dexus Convenience

0.63

Correlation Coefficient

BTC Health  Dexus Convenience

Poor diversification

The 3 months correlation between BTC and Dexus is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding BTC Health Limited and Dexus Convenience Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexus Convenience Retail and BTC Health 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 BTC Health Limited are associated (or correlated) with Dexus Convenience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexus Convenience Retail has no effect on the direction of BTC Health i.e., BTC Health and Dexus Convenience go up and down completely randomly.

Pair Corralation between BTC Health and Dexus Convenience

Assuming the 90 days trading horizon BTC Health Limited is expected to under-perform the Dexus Convenience. In addition to that, BTC Health is 4.37 times more volatile than Dexus Convenience Retail. It trades about -0.14 of its total potential returns per unit of risk. Dexus Convenience Retail is currently generating about 0.01 per unit of volatility. If you would invest  296.00  in Dexus Convenience Retail on August 30, 2024 and sell it today you would earn a total of  0.00  from holding Dexus Convenience Retail or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

BTC Health Limited  vs.  Dexus Convenience Retail

BTC Health Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BTC Health Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, BTC Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dexus Convenience Retail

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dexus Convenience Retail are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Dexus Convenience may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with BTC Health and Dexus Convenience

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

The idea behind BTC Health Limited and Dexus Convenience Retail 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.