Correlation Between Bit Digital and SemiLEDS

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

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

Diversification Opportunities for Bit Digital and SemiLEDS

0.18

Correlation Coefficient

Bit Digital  SemiLEDS

Average diversification

The 3 months correlation between Bit and SemiLEDS is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bit Digital and SemiLEDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SemiLEDS and Bit Digital 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 Bit Digital are associated (or correlated) with SemiLEDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SemiLEDS has no effect on the direction of Bit Digital i.e., Bit Digital and SemiLEDS go up and down completely randomly.

Pair Corralation between Bit Digital and SemiLEDS

Given the investment horizon of 90 days Bit Digital is expected to generate 1.04 times more return on investment than SemiLEDS. However, Bit Digital is 1.04 times more volatile than SemiLEDS. It trades about 0.14 of its potential returns per unit of risk. SemiLEDS is currently generating about -0.08 per unit of risk. If you would invest  283.00  in Bit Digital on July 4, 2024 and sell it today you would earn a total of  42.00  from holding Bit Digital or generate 14.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bit Digital  vs.  SemiLEDS

Bit Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bit Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Bit Digital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SemiLEDS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SemiLEDS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Bit Digital and SemiLEDS

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

The idea behind Bit Digital and SemiLEDS 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.