Correlation Between Galaxy Digital and Cypherpunk Holdings

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

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

Diversification Opportunities for Galaxy Digital and Cypherpunk Holdings

0.8

Correlation Coefficient

Galaxy Digital  Cypherpunk Holdings

Very poor diversification

The 3 months correlation between Galaxy and Cypherpunk is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Digital Holdings and Cypherpunk Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cypherpunk Holdings and Galaxy Digital 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 Galaxy Digital Holdings 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 Galaxy Digital i.e., Galaxy Digital and Cypherpunk Holdings go up and down completely randomly.

Pair Corralation between Galaxy Digital and Cypherpunk Holdings

Assuming the 90 days horizon Galaxy Digital Holdings is expected to under-perform the Cypherpunk Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Galaxy Digital Holdings is 2.01 times less risky than Cypherpunk Holdings. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Cypherpunk Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  202.00  in Cypherpunk Holdings on December 30, 2024 and sell it today you would lose (43.00) from holding Cypherpunk Holdings or give up 21.29% of portfolio value over 90 days.

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

Galaxy Digital Holdings  vs.  Cypherpunk Holdings

Galaxy Digital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galaxy Digital Holdings 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 technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 fragile basic indicators, Cypherpunk Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Galaxy Digital and Cypherpunk Holdings

The main advantage of trading using opposite Galaxy Digital and Cypherpunk Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galaxy Digital 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 Galaxy Digital Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.