Correlation Between Cypherpunk Holdings and Armada Mercantile

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

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

Diversification Opportunities for Cypherpunk Holdings and Armada Mercantile

-0.58

Correlation Coefficient

Cypherpunk Holdings  Armada Mercantile

Excellent diversification

The 3 months correlation between Cypherpunk and Armada is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cypherpunk Holdings and Armada Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Mercantile and Cypherpunk Holdings 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 Cypherpunk Holdings are associated (or correlated) with Armada Mercantile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Mercantile has no effect on the direction of Cypherpunk Holdings i.e., Cypherpunk Holdings and Armada Mercantile go up and down completely randomly.

Pair Corralation between Cypherpunk Holdings and Armada Mercantile

Assuming the 90 days horizon Cypherpunk Holdings is expected to generate 4.84 times more return on investment than Armada Mercantile. However, Cypherpunk Holdings is 4.84 times more volatile than Armada Mercantile. It trades about 0.27 of its potential returns per unit of risk. Armada Mercantile is currently generating about -0.05 per unit of risk. If you would invest  10.00  in Cypherpunk Holdings on September 2, 2024 and sell it today you would earn a total of  109.00  from holding Cypherpunk Holdings or generate 1090.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Cypherpunk Holdings  vs.  Armada Mercantile

Cypherpunk Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cypherpunk Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Cypherpunk Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Armada Mercantile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Mercantile 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 basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cypherpunk Holdings and Armada Mercantile

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

The idea behind Cypherpunk Holdings and Armada Mercantile 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.