Correlation Between EPAM Systems and Greenidge Generation

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

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

Diversification Opportunities for EPAM Systems and Greenidge Generation

0.8

Correlation Coefficient

EPAM Systems  Greenidge Generation

Very poor diversification

The 3 months correlation between EPAM and Greenidge is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and Greenidge Generation Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenidge Generation and EPAM Systems 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 EPAM Systems are associated (or correlated) with Greenidge Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenidge Generation has no effect on the direction of EPAM Systems i.e., EPAM Systems and Greenidge Generation go up and down completely randomly.

Pair Corralation between EPAM Systems and Greenidge Generation

Given the investment horizon of 90 days EPAM Systems is expected to under-perform the Greenidge Generation. But the stock apears to be less risky and, when comparing its historical volatility, EPAM Systems is 1.03 times less risky than Greenidge Generation. The stock trades about -0.2 of its potential returns per unit of risk. The Greenidge Generation Holdings is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  871.00  in Greenidge Generation Holdings on December 29, 2024 and sell it today you would lose (175.00) from holding Greenidge Generation Holdings or give up 20.09% of portfolio value over 90 days.

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

EPAM Systems  vs.  Greenidge Generation Holdings

EPAM Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days EPAM Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Greenidge Generation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greenidge Generation Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with EPAM Systems and Greenidge Generation

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

The idea behind EPAM Systems and Greenidge Generation Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.