Correlation Between Bitcoin and TEL

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

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

Diversification Opportunities for Bitcoin and TEL

0.18

Correlation Coefficient

Bitcoin  TEL

Average diversification

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

Pair Corralation between Bitcoin and TEL

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the TEL. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bitcoin is 3.65 times less risky than TEL. The crypto coin trades about -0.09 of its potential returns per unit of risk. The TEL is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.59  in TEL on January 4, 2025 and sell it today you would lose (0.11) from holding TEL or give up 18.65% of portfolio value over 90 days.

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

Bitcoin  vs.  TEL

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for Bitcoin shareholders.

TEL

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Bitcoin and TEL 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..