Correlation Between TLOS and Bitcoin

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

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

Diversification Opportunities for TLOS and Bitcoin

-0.47

Correlation Coefficient

TLOS  Bitcoin

Very good diversification

The 3 months correlation between TLOS and Bitcoin is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding TLOS and Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin and TLOS 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 TLOS are associated (or correlated) with Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin has no effect on the direction of TLOS i.e., TLOS and Bitcoin go up and down completely randomly.

Pair Corralation between TLOS and Bitcoin

Assuming the 90 days trading horizon TLOS is expected to under-perform the Bitcoin. In addition to that, TLOS is 1.55 times more volatile than Bitcoin. It trades about -0.02 of its total potential returns per unit of risk. Bitcoin is currently generating about 0.25 per unit of volatility. If you would invest  5,748,184  in Bitcoin on September 2, 2024 and sell it today you would earn a total of  3,899,167  from holding Bitcoin or generate 67.83% return on investment over 90 days.

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

TLOS  vs.  Bitcoin

TLOS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TLOS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, TLOS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bitcoin

Risk-Adjusted Performance

19 of 100

Solid

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

Pair Trading with TLOS and Bitcoin

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

The idea behind TLOS and Bitcoin 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.