Correlation Between Wrapped Bitcoin and Aptos

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

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

Diversification Opportunities for Wrapped Bitcoin and Aptos

0.74

Correlation Coefficient

Wrapped Bitcoin  Aptos

Poor diversification

The 3 months correlation between Wrapped and Aptos is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Bitcoin and Aptos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptos and Wrapped 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 Wrapped Bitcoin are associated (or correlated) with Aptos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptos has no effect on the direction of Wrapped Bitcoin i.e., Wrapped Bitcoin and Aptos go up and down completely randomly.

Pair Corralation between Wrapped Bitcoin and Aptos

Assuming the 90 days trading horizon Wrapped Bitcoin is expected to generate 5.88 times less return on investment than Aptos. But when comparing it to its historical volatility, Wrapped Bitcoin is 1.52 times less risky than Aptos. It trades about 0.01 of its potential returns per unit of risk. Aptos is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  686.00  in Aptos on June 21, 2024 and sell it today you would lose (3.00) from holding Aptos or give up 0.44% of portfolio value over 90 days.

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

Wrapped Bitcoin  vs.  Aptos

Wrapped Bitcoin

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aptos

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aptos are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Aptos may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with Wrapped Bitcoin and Aptos

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

The idea behind Wrapped Bitcoin and Aptos 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..