Correlation Between Digihost Technology and Bitfarms

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

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

Diversification Opportunities for Digihost Technology and Bitfarms

0.7

Correlation Coefficient

Digihost Technology  Bitfarms

Poor diversification

The 3 months correlation between Digihost and Bitfarms is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Digihost Technology and Bitfarms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitfarms and Digihost Technology 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 Digihost Technology are associated (or correlated) with Bitfarms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitfarms has no effect on the direction of Digihost Technology i.e., Digihost Technology and Bitfarms go up and down completely randomly.

Pair Corralation between Digihost Technology and Bitfarms

Assuming the 90 days trading horizon Digihost Technology is expected to generate 1.01 times more return on investment than Bitfarms. However, Digihost Technology is 1.01 times more volatile than Bitfarms. It trades about 0.2 of its potential returns per unit of risk. Bitfarms is currently generating about 0.05 per unit of risk. If you would invest  157.00  in Digihost Technology on September 4, 2024 and sell it today you would earn a total of  136.00  from holding Digihost Technology or generate 86.62% return on investment over 90 days.

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

Digihost Technology  vs.  Bitfarms

Digihost Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digihost Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical indicators, Digihost Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Bitfarms

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Digihost Technology and Bitfarms

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

The idea behind Digihost Technology and Bitfarms 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.