Correlation Between Bit Origin and Village Farms

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

By analyzing existing cross correlation between Bit Origin and Village Farms International, you can compare the effects of market volatilities on Bit Origin and Village Farms 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 Village Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bit Origin and Village Farms.

Diversification Opportunities for Bit Origin and Village Farms

0.71

Correlation Coefficient

Bit Origin  Village Farms

Poor diversification

The 3 months correlation between Bit and Village is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bit Origin and Village Farms International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Farms Intern 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 Village Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Farms Intern has no effect on the direction of Bit Origin i.e., Bit Origin and Village Farms go up and down completely randomly.

Pair Corralation between Bit Origin and Village Farms

Given the investment horizon of 90 days Bit Origin is expected to under-perform the Village Farms. In addition to that, Bit Origin is 1.76 times more volatile than Village Farms International. It trades about -0.18 of its total potential returns per unit of risk. Village Farms International is currently generating about -0.07 per unit of volatility. If you would invest  99.00  in Village Farms International on September 17, 2024 and sell it today you would lose (19.00) from holding Village Farms International or give up 19.19% of portfolio value over 90 days.

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

Bit Origin  vs.  Village Farms International

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.

Village Farms Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Village Farms International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Bit Origin and Village Farms

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

The idea behind Bit Origin and Village Farms International 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.