Correlation Between Bitcoin and COMP

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

By analyzing existing cross correlation between Bitcoin and COMP, you can compare the effects of market volatilities on Bitcoin and COMP 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 COMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and COMP.

Diversification Opportunities for Bitcoin and COMP

0.26

Correlation Coefficient

Bitcoin  COMP

Modest diversification

The 3 months correlation between Bitcoin and COMP is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and COMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMP 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 COMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMP has no effect on the direction of Bitcoin i.e., Bitcoin and COMP go up and down completely randomly.

Pair Corralation between Bitcoin and COMP

Assuming the 90 days trading horizon Bitcoin is expected to generate 0.29 times more return on investment than COMP. However, Bitcoin is 3.49 times less risky than COMP. It trades about 0.1 of its potential returns per unit of risk. COMP is currently generating about 0.01 per unit of risk. If you would invest  10,481,400  in Bitcoin on May 9, 2025 and sell it today you would earn a total of  1,022,900  from holding Bitcoin or generate 9.76% return on investment over 90 days.

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

Bitcoin  vs.  COMP

Bitcoin

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin may actually be approaching a critical reversion point that can send shares even higher in September 2025.

COMP

Risk-Adjusted Performance

Weakest

Over the last 90 days COMP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, COMP 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 and COMP

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

The idea behind Bitcoin and COMP 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.