Correlation Between Bit Origin and Coinbase Global

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

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

Diversification Opportunities for Bit Origin and Coinbase Global

-0.6

Correlation Coefficient

Bit Origin  Coinbase Global

Excellent diversification

The 3 months correlation between Bit and Coinbase is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bit Origin and Coinbase Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinbase Global and Bit Origin 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 Bit Origin are associated (or correlated) with Coinbase Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinbase Global has no effect on the direction of Bit Origin i.e., Bit Origin and Coinbase Global go up and down completely randomly.

Pair Corralation between Bit Origin and Coinbase Global

Given the investment horizon of 90 days Bit Origin is expected to under-perform the Coinbase Global. But the stock apears to be less risky and, when comparing its historical volatility, Bit Origin is 1.23 times less risky than Coinbase Global. The stock trades about -0.17 of its potential returns per unit of risk. The Coinbase Global is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  18,627  in Coinbase Global on September 4, 2024 and sell it today you would earn a total of  11,613  from holding Coinbase Global or generate 62.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Bit Origin  vs.  Coinbase Global

Bit Origin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bit Origin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting 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.

Coinbase Global

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coinbase Global are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Coinbase Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bit Origin and Coinbase Global

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

The idea behind Bit Origin and Coinbase 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.