Correlation Between Digihost Technology and Bit Digital

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

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

Diversification Opportunities for Digihost Technology and Bit Digital

-0.28

Correlation Coefficient

Digihost Technology  Bit Digital

Very good diversification

The 3 months correlation between Digihost and Bit is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Digihost Technology and Bit Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bit Digital 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 Bit Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bit Digital has no effect on the direction of Digihost Technology i.e., Digihost Technology and Bit Digital go up and down completely randomly.

Pair Corralation between Digihost Technology and Bit Digital

Given the investment horizon of 90 days Digihost Technology is expected to generate 1.61 times more return on investment than Bit Digital. However, Digihost Technology is 1.61 times more volatile than Bit Digital. It trades about -0.01 of its potential returns per unit of risk. Bit Digital is currently generating about -0.16 per unit of risk. If you would invest  212.00  in Digihost Technology on November 28, 2024 and sell it today you would lose (54.00) from holding Digihost Technology or give up 25.47% of portfolio value over 90 days.

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

Digihost Technology  vs.  Bit Digital

Digihost Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digihost Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Digihost Technology is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Bit Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bit Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Digihost Technology and Bit Digital

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

The idea behind Digihost Technology and Bit Digital 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.