Correlation Between Bittensor and LRC

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

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

Diversification Opportunities for Bittensor and LRC

0.64

Correlation Coefficient

Bittensor  LRC

Poor diversification

The 3 months correlation between Bittensor and LRC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bittensor and LRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LRC and Bittensor 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 Bittensor are associated (or correlated) with LRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LRC has no effect on the direction of Bittensor i.e., Bittensor and LRC go up and down completely randomly.

Pair Corralation between Bittensor and LRC

Assuming the 90 days trading horizon Bittensor is expected to generate 1.13 times more return on investment than LRC. However, Bittensor is 1.13 times more volatile than LRC. It trades about 0.08 of its potential returns per unit of risk. LRC is currently generating about 0.01 per unit of risk. If you would invest  33,835  in Bittensor on April 21, 2025 and sell it today you would earn a total of  7,589  from holding Bittensor or generate 22.43% return on investment over 90 days.

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

Bittensor  vs.  LRC

Bittensor

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bittensor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bittensor exhibited solid returns over the last few months and may actually be approaching a breakup point.

LRC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LRC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, LRC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bittensor and LRC

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

The idea behind Bittensor and LRC 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.