Correlation Between Embrace Change and Cipher Mining

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

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

Diversification Opportunities for Embrace Change and Cipher Mining

-0.53

Correlation Coefficient

Embrace Change  Cipher Mining

Excellent diversification

The 3 months correlation between Embrace and Cipher is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Mining and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Cipher Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipher Mining has no effect on the direction of Embrace Change i.e., Embrace Change and Cipher Mining go up and down completely randomly.

Pair Corralation between Embrace Change and Cipher Mining

Assuming the 90 days horizon Embrace Change Acquisition is expected to generate 2.23 times more return on investment than Cipher Mining. However, Embrace Change is 2.23 times more volatile than Cipher Mining. It trades about 0.18 of its potential returns per unit of risk. Cipher Mining is currently generating about -0.12 per unit of risk. If you would invest  8.52  in Embrace Change Acquisition on December 29, 2024 and sell it today you would earn a total of  9.48  from holding Embrace Change Acquisition or generate 111.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.85%
Values	Daily Returns

Embrace Change Acquisition  vs.  Cipher Mining

Embrace Change Acqui

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Embrace Change reported solid returns over the last few months and may actually be approaching a breakup point.

Cipher Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cipher Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Embrace Change and Cipher Mining

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

The idea behind Embrace Change Acquisition and Cipher 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.