Correlation Between Bitcoin SV and Cosmos

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

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

Diversification Opportunities for Bitcoin SV and Cosmos

0.89

Correlation Coefficient

Bitcoin SV  Cosmos

Very poor diversification

The 3 months correlation between Bitcoin and Cosmos is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin SV and Cosmos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos and Bitcoin SV 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 Bitcoin SV are associated (or correlated) with Cosmos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos has no effect on the direction of Bitcoin SV i.e., Bitcoin SV and Cosmos go up and down completely randomly.

Pair Corralation between Bitcoin SV and Cosmos

Assuming the 90 days trading horizon Bitcoin SV is expected to generate 1.69 times more return on investment than Cosmos. However, Bitcoin SV is 1.69 times more volatile than Cosmos. It trades about 0.06 of its potential returns per unit of risk. Cosmos is currently generating about -0.01 per unit of risk. If you would invest  4,180  in Bitcoin SV on January 25, 2024 and sell it today you would earn a total of  2,975  from holding Bitcoin SV or generate 71.17% return on investment over 90 days.

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

Bitcoin SV  vs.  Cosmos

Bitcoin SV

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin SV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bitcoin SV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cosmos

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bitcoin SV and Cosmos

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

The idea behind Bitcoin SV and Cosmos 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.