Correlation Between Faraday Copper and Hut 8

Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Hut 8 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 Faraday Copper and Hut 8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Faraday Copper Corp and Hut 8 Mining, you can compare the effects of market volatilities on Faraday Copper and Hut 8 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 Faraday Copper with a short position of Hut 8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Hut 8.

Diversification Opportunities for Faraday Copper and Hut 8

-0.59

Correlation Coefficient

Faraday Copper  Hut 8

Excellent diversification

The 3 months correlation between Faraday and Hut is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Hut 8 Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hut 8 Mining and Faraday Copper 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 Faraday Copper Corp are associated (or correlated) with Hut 8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hut 8 Mining has no effect on the direction of Faraday Copper i.e., Faraday Copper and Hut 8 go up and down completely randomly.

Pair Corralation between Faraday Copper and Hut 8

Assuming the 90 days trading horizon Faraday Copper is expected to generate 13.07 times less return on investment than Hut 8. But when comparing it to its historical volatility, Faraday Copper Corp is 1.96 times less risky than Hut 8. It trades about 0.01 of its potential returns per unit of risk. Hut 8 Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,600  in Hut 8 Mining on October 24, 2024 and sell it today you would earn a total of  2,143  from holding Hut 8 Mining or generate 133.94% return on investment over 90 days.

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

Faraday Copper Corp  vs.  Hut 8 Mining

Faraday Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hut 8 Mining

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hut 8 Mining are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Hut 8 displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Faraday Copper and Hut 8

The main advantage of trading using opposite Faraday Copper and Hut 8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Hut 8 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 Hut 8 will offset losses from the drop in Hut 8's long position.

The idea behind Faraday Copper Corp and Hut 8 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.