Correlation Between BITM and Phala Network

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

Diversification Opportunities for BITM and Phala Network

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between BITM and Phala is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BITM and Phala Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phala Network and BITM 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 BITM are associated (or correlated) with Phala Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phala Network has no effect on the direction of BITM i.e., BITM and Phala Network go up and down completely randomly.

Pair Corralation between BITM and Phala Network

Assuming the 90 days trading horizon BITM is expected to generate 3.04 times less return on investment than Phala Network. But when comparing it to its historical volatility, BITM is 1.95 times less risky than Phala Network. It trades about 0.04 of its potential returns per unit of risk. Phala Network is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Phala Network on December 29, 2023 and sell it today you would earn a total of  12.00  from holding Phala Network or generate 75.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy56.52%
ValuesDaily Returns

BITM  vs.  Phala Network

 Performance 
       Timeline  
BITM 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days BITM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BITM is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Phala Network 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Phala Network are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Phala Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

BITM and Phala Network Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BITM and Phala Network

The main advantage of trading using opposite BITM and Phala Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BITM position performs unexpectedly, Phala Network 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 Phala Network will offset losses from the drop in Phala Network's long position.
The idea behind BITM and Phala Network 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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