Correlation Between CleanSpark and Stronghold Digital

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

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

Diversification Opportunities for CleanSpark and Stronghold Digital

0.75

Correlation Coefficient

CleanSpark  Stronghold Digital

Poor diversification

The 3 months correlation between CleanSpark and Stronghold is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CleanSpark and Stronghold Digital Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stronghold Digital Mining and CleanSpark 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 CleanSpark are associated (or correlated) with Stronghold Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stronghold Digital Mining has no effect on the direction of CleanSpark i.e., CleanSpark and Stronghold Digital go up and down completely randomly.

Pair Corralation between CleanSpark and Stronghold Digital

Given the investment horizon of 90 days CleanSpark is expected to generate 0.81 times more return on investment than Stronghold Digital. However, CleanSpark is 1.23 times less risky than Stronghold Digital. It trades about 0.03 of its potential returns per unit of risk. Stronghold Digital Mining is currently generating about 0.01 per unit of risk. If you would invest  1,021  in CleanSpark on October 1, 2024 and sell it today you would lose (43.00) from holding CleanSpark or give up 4.21% of portfolio value over 90 days.

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

CleanSpark  vs.  Stronghold Digital Mining

CleanSpark

Risk-Adjusted Performance

4 of 100

Insignificant

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

Stronghold Digital Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CleanSpark and Stronghold Digital

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

The idea behind CleanSpark and Stronghold Digital 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.