Correlation Between Plume and BounceBit

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

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

Diversification Opportunities for Plume and BounceBit

-0.05

Correlation Coefficient

Plume  BounceBit

Good diversification

The 3 months correlation between Plume and BounceBit is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Plume and BounceBit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BounceBit and Plume 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 Plume are associated (or correlated) with BounceBit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BounceBit has no effect on the direction of Plume i.e., Plume and BounceBit go up and down completely randomly.

Pair Corralation between Plume and BounceBit

Assuming the 90 days trading horizon Plume is expected to generate 16.0 times more return on investment than BounceBit. However, Plume is 16.0 times more volatile than BounceBit. It trades about 0.11 of its potential returns per unit of risk. BounceBit is currently generating about -0.04 per unit of risk. If you would invest  15.00  in Plume on February 3, 2025 and sell it today you would earn a total of  2.00  from holding Plume or generate 13.33% return on investment over 90 days.

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

Plume  vs.  BounceBit

Plume

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plume are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Plume exhibited solid returns over the last few months and may actually be approaching a breakup point.

BounceBit

Risk-Adjusted Performance

Very Weak

Over the last 90 days BounceBit 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 June 2025. The latest tumult may also be a sign of longer-term up-swing for BounceBit shareholders.

Pair Trading with Plume and BounceBit

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

The idea behind Plume and BounceBit 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.