Correlation Between Bitcoin Gold and Perpetual Protocol

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

By analyzing existing cross correlation between Bitcoin Gold and Perpetual Protocol, you can compare the effects of market volatilities on Bitcoin Gold and Perpetual Protocol 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 Gold with a short position of Perpetual Protocol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Gold and Perpetual Protocol.

Diversification Opportunities for Bitcoin Gold and Perpetual Protocol

0.72

Correlation Coefficient

Bitcoin Gold  Perpetual Protocol

Poor diversification

The 3 months correlation between Bitcoin and Perpetual is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and Perpetual Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perpetual Protocol and Bitcoin Gold 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 Gold are associated (or correlated) with Perpetual Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perpetual Protocol has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and Perpetual Protocol go up and down completely randomly.

Pair Corralation between Bitcoin Gold and Perpetual Protocol

Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 0.64 times more return on investment than Perpetual Protocol. However, Bitcoin Gold is 1.55 times less risky than Perpetual Protocol. It trades about -0.05 of its potential returns per unit of risk. Perpetual Protocol is currently generating about -0.07 per unit of risk. If you would invest  3,635  in Bitcoin Gold on January 17, 2024 and sell it today you would lose (296.00) from holding Bitcoin Gold or give up 8.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Bitcoin Gold  vs.  Perpetual Protocol

Bitcoin Gold

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Gold are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bitcoin Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Perpetual Protocol

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bitcoin Gold and Perpetual Protocol

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

The idea behind Bitcoin Gold and Perpetual Protocol 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.