Correlation Between Buhler Industries and Hut 8

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

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

Diversification Opportunities for Buhler Industries and Hut 8

0.74

Correlation Coefficient

Buhler Industries  Hut 8

Poor diversification

The 3 months correlation between Buhler and Hut is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Buhler Industries 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 Buhler Industries 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 Buhler Industries 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 Buhler Industries i.e., Buhler Industries and Hut 8 go up and down completely randomly.

Pair Corralation between Buhler Industries and Hut 8

Assuming the 90 days trading horizon Buhler Industries is expected to generate 0.28 times more return on investment than Hut 8. However, Buhler Industries is 3.62 times less risky than Hut 8. It trades about 0.24 of its potential returns per unit of risk. Hut 8 Mining is currently generating about -0.04 per unit of risk. If you would invest  288.00  in Buhler Industries on October 4, 2024 and sell it today you would earn a total of  27.00  from holding Buhler Industries or generate 9.38% return on investment over 90 days.

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

Buhler Industries  vs.  Hut 8 Mining

Buhler Industries

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Buhler Industries are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Buhler Industries displayed solid returns over the last few months and may actually be approaching a breakup point.

Hut 8 Mining

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hut 8 Mining are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Hut 8 displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Buhler Industries and Hut 8

The main advantage of trading using opposite Buhler Industries and Hut 8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buhler Industries 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 Buhler Industries 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.