Correlation Between Bitcoin and Natural Hlth

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

Diversification Opportunities for Bitcoin and Natural Hlth

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bitcoin and Natural is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Natural Hlth Trd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Hlth Trd and Bitcoin 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 are associated (or correlated) with Natural Hlth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Hlth Trd has no effect on the direction of Bitcoin i.e., Bitcoin and Natural Hlth go up and down completely randomly.

Pair Corralation between Bitcoin and Natural Hlth

Assuming the 90 days trading horizon Bitcoin is expected to generate 1.9 times more return on investment than Natural Hlth. However, Bitcoin is 1.9 times more volatile than Natural Hlth Trd. It trades about 0.03 of its potential returns per unit of risk. Natural Hlth Trd is currently generating about -0.02 per unit of risk. If you would invest  1,570,708  in Bitcoin on July 3, 2022 and sell it today you would earn a total of  368,083  from holding Bitcoin or generate 23.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy96.55%
ValuesDaily Returns

Bitcoin  vs.  Natural Hlth Trd

 Performance (%) 
       Timeline  
Bitcoin 
Bitcoin Performance
0 of 100
Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bitcoin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bitcoin Price Channel

Natural Hlth Trd 
Natural Performance
0 of 100
Over the last 90 days Natural Hlth Trd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Natural Price Channel

Bitcoin and Natural Hlth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bitcoin and Natural Hlth

The main advantage of trading using opposite Bitcoin and Natural Hlth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, Natural Hlth 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 Natural Hlth will offset losses from the drop in Natural Hlth's long position.
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The idea behind Bitcoin and Natural Hlth Trd 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.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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