Correlation Between AERGO and Bitcoin Diamond

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

Diversification Opportunities for AERGO and Bitcoin Diamond

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between AERGO and Bitcoin is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding AERGO and Bitcoin Diamond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Diamond and AERGO 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 AERGO are associated (or correlated) with Bitcoin Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Diamond has no effect on the direction of AERGO i.e., AERGO and Bitcoin Diamond go up and down completely randomly.

Pair Corralation between AERGO and Bitcoin Diamond

Assuming the 90 days trading horizon AERGO is expected to under-perform the Bitcoin Diamond. But the crypto coin apears to be less risky and, when comparing its historical volatility, AERGO is 1.01 times less risky than Bitcoin Diamond. The crypto coin trades about -0.19 of its potential returns per unit of risk. The Bitcoin Diamond is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Bitcoin Diamond on February 23, 2022 and sell it today you would lose (11.00)  from holding Bitcoin Diamond or give up 33.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AERGO  vs.  Bitcoin Diamond

 Performance (%) 
      Timeline 
AERGO 
AERGO Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in AERGO are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, AERGO sustained solid returns over the last few months and may actually be approaching a breakup point.

AERGO Price Channel

Bitcoin Diamond 
Bitcoin Performance
0 of 100
Over the last 90 days Bitcoin Diamond has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's fundamental indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for Bitcoin Diamond investors.

Bitcoin Price Channel

AERGO and Bitcoin Diamond Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with AERGO and Bitcoin Diamond

The main advantage of trading using opposite AERGO and Bitcoin Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AERGO position performs unexpectedly, Bitcoin Diamond 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 Diamond will offset losses from the drop in Bitcoin Diamond's long position.
The idea behind AERGO and Bitcoin Diamond 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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