Correlation Between Polkadot and BTC Standard

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Can any of the company-specific risk be diversified away by investing in both Polkadot and BTC Standard 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 Polkadot and BTC Standard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polkadot and BTC Standard Hashrate, you can compare the effects of market volatilities on Polkadot and BTC Standard 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 Polkadot with a short position of BTC Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polkadot and BTC Standard.

Diversification Opportunities for Polkadot and BTC Standard

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Polkadot and BTCST is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Polkadot and BTC Standard Hashrate Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Standard Hashrate and Polkadot 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 Polkadot are associated (or correlated) with BTC Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Standard Hashrate has no effect on the direction of Polkadot i.e., Polkadot and BTC Standard go up and down completely randomly.

Pair Corralation between Polkadot and BTC Standard

Assuming the 90 days trading horizon Polkadot is expected to generate 11.71 times less return on investment than BTC Standard. But when comparing it to its historical volatility, Polkadot is 4.62 times less risky than BTC Standard. It trades about 0.12 of its potential returns per unit of risk. BTC Standard Hashrate is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  874.00  in BTC Standard Hashrate on May 21, 2022 and sell it today you would earn a total of  1,664  from holding BTC Standard Hashrate or generate 190.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Polkadot  vs.  BTC Standard Hashrate Token

 Performance (%) 
       Timeline  
Polkadot 
Polkadot Performance
0 of 100
Over the last 90 days Polkadot has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Polkadot investors.

Polkadot Price Channel

BTC Standard Hashrate 
BTCST Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BTC Standard Hashrate are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BTC Standard sustained solid returns over the last few months and may actually be approaching a breakup point.

BTCST Price Channel

Polkadot and BTC Standard Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polkadot and BTC Standard

The main advantage of trading using opposite Polkadot and BTC Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polkadot position performs unexpectedly, BTC Standard 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 BTC Standard will offset losses from the drop in BTC Standard's long position.
The idea behind Polkadot and BTC Standard Hashrate 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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