Correlation Between Bitcoin and Sushi

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

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

Diversification Opportunities for Bitcoin and Sushi

0.69

Correlation Coefficient

Bitcoin  Sushi

Poor diversification

The 3 months correlation between Bitcoin and Sushi is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Sushi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sushi 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 Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sushi has no effect on the direction of Bitcoin i.e., Bitcoin and Sushi go up and down completely randomly.

Pair Corralation between Bitcoin and Sushi

Assuming the 90 days trading horizon Bitcoin is expected to generate 1.13 times more return on investment than Sushi. However, Bitcoin is 1.13 times more volatile than Sushi. It trades about 0.1 of its potential returns per unit of risk. Sushi is currently generating about 0.03 per unit of risk. If you would invest  1,712,919  in Bitcoin on August 30, 2024 and sell it today you would earn a total of  7,916,110  from holding Bitcoin or generate 462.14% return on investment over 90 days.

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

Bitcoin  vs.  Sushi

Bitcoin

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sushi

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sushi are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Sushi exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin and Sushi

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

The idea behind Bitcoin and Sushi 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.