Correlation Between Bittensor and LUNA

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

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

Diversification Opportunities for Bittensor and LUNA

0.73

Correlation Coefficient

Bittensor  LUNA

Poor diversification

The 3 months correlation between Bittensor and LUNA is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bittensor and LUNA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUNA 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 LUNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUNA has no effect on the direction of Bittensor i.e., Bittensor and LUNA go up and down completely randomly.

Pair Corralation between Bittensor and LUNA

Assuming the 90 days trading horizon Bittensor is expected to generate 1.14 times more return on investment than LUNA. However, Bittensor is 1.14 times more volatile than LUNA. It trades about 0.08 of its potential returns per unit of risk. LUNA is currently generating about -0.01 per unit of risk. If you would invest  34,948  in Bittensor on April 25, 2025 and sell it today you would earn a total of  7,833  from holding Bittensor or generate 22.41% return on investment over 90 days.

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

Bittensor  vs.  LUNA

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.

LUNA

Risk-Adjusted Performance

Very Weak

Over the last 90 days LUNA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, LUNA 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 LUNA

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

The idea behind Bittensor and LUNA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.