Correlation Between Argo Blockchain and Greenidge Generation

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

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

Diversification Opportunities for Argo Blockchain and Greenidge Generation

0.38

Correlation Coefficient

Argo Blockchain  Greenidge Generation

Weak diversification

The 3 months correlation between Argo and Greenidge is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Argo Blockchain PLC and Greenidge Generation Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenidge Generation and Argo Blockchain 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 Argo Blockchain PLC are associated (or correlated) with Greenidge Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenidge Generation has no effect on the direction of Argo Blockchain i.e., Argo Blockchain and Greenidge Generation go up and down completely randomly.

Pair Corralation between Argo Blockchain and Greenidge Generation

Given the investment horizon of 90 days Argo Blockchain PLC is expected to generate 1.19 times more return on investment than Greenidge Generation. However, Argo Blockchain is 1.19 times more volatile than Greenidge Generation Holdings. It trades about 0.01 of its potential returns per unit of risk. Greenidge Generation Holdings is currently generating about -0.01 per unit of risk. If you would invest  158.00  in Argo Blockchain PLC on September 4, 2024 and sell it today you would lose (77.00) from holding Argo Blockchain PLC or give up 48.73% of portfolio value over 90 days.

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

Argo Blockchain PLC  vs.  Greenidge Generation Holdings

Argo Blockchain PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argo Blockchain PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Greenidge Generation

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Argo Blockchain and Greenidge Generation

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

The idea behind Argo Blockchain PLC and Greenidge Generation 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.