Correlation Between Bitfarms and Hut 8

Can any of the company-specific risk be diversified away by investing in both Bitfarms and Hut 8 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 Bitfarms and Hut 8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bitfarms and Hut 8 Mining, you can compare the effects of market volatilities on Bitfarms and Hut 8 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 Bitfarms with a short position of Hut 8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitfarms and Hut 8.

Diversification Opportunities for Bitfarms and Hut 8

0.9

Correlation Coefficient

Bitfarms  Hut 8

Almost no diversification

The 3 months correlation between Bitfarms and Hut is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bitfarms and Hut 8 Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hut 8 Mining and Bitfarms 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 Bitfarms are associated (or correlated) with Hut 8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hut 8 Mining has no effect on the direction of Bitfarms i.e., Bitfarms and Hut 8 go up and down completely randomly.

Pair Corralation between Bitfarms and Hut 8

Assuming the 90 days trading horizon Bitfarms is expected to under-perform the Hut 8. But the stock apears to be less risky and, when comparing its historical volatility, Bitfarms is 1.3 times less risky than Hut 8. The stock trades about -0.15 of its potential returns per unit of risk. The Hut 8 Mining is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  3,640  in Hut 8 Mining on December 1, 2024 and sell it today you would lose (1,507) from holding Hut 8 Mining or give up 41.4% of portfolio value over 90 days.

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

Bitfarms  vs.  Hut 8 Mining

Bitfarms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitfarms has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hut 8 Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hut 8 Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bitfarms and Hut 8

The main advantage of trading using opposite Bitfarms and Hut 8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitfarms position performs unexpectedly, Hut 8 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 Hut 8 will offset losses from the drop in Hut 8's long position.

The idea behind Bitfarms and Hut 8 Mining 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.