Correlation Between Armada Mercantile and Cypherpunk Holdings

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

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

Diversification Opportunities for Armada Mercantile and Cypherpunk Holdings

0.05

Correlation Coefficient

Armada Mercantile  Cypherpunk Holdings

Significant diversification

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

Pair Corralation between Armada Mercantile and Cypherpunk Holdings

Assuming the 90 days horizon Armada Mercantile is expected to generate 1.86 times more return on investment than Cypherpunk Holdings. However, Armada Mercantile is 1.86 times more volatile than Cypherpunk Holdings. It trades about 0.05 of its potential returns per unit of risk. Cypherpunk Holdings is currently generating about 0.01 per unit of risk. If you would invest  25.00  in Armada Mercantile on December 31, 2024 and sell it today you would lose (5.00) from holding Armada Mercantile or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Armada Mercantile  vs.  Cypherpunk Holdings

Armada Mercantile

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Armada Mercantile are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Armada Mercantile reported solid returns over the last few months and may actually be approaching a breakup point.

Cypherpunk Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cypherpunk Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cypherpunk Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Armada Mercantile and Cypherpunk Holdings

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

The idea behind Armada Mercantile and Cypherpunk Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.