Correlation Between Greenidge Generation and Stronghold Digital

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

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

Diversification Opportunities for Greenidge Generation and Stronghold Digital

0.64

Correlation Coefficient

Greenidge Generation  Stronghold Digital

Poor diversification

The 3 months correlation between Greenidge and Stronghold is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Greenidge Generation Holdings and Stronghold Digital Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stronghold Digital Mining and Greenidge Generation 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 Greenidge Generation Holdings are associated (or correlated) with Stronghold Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stronghold Digital Mining has no effect on the direction of Greenidge Generation i.e., Greenidge Generation and Stronghold Digital go up and down completely randomly.

Pair Corralation between Greenidge Generation and Stronghold Digital

Given the investment horizon of 90 days Greenidge Generation Holdings is expected to under-perform the Stronghold Digital. But the stock apears to be less risky and, when comparing its historical volatility, Greenidge Generation Holdings is 1.51 times less risky than Stronghold Digital. The stock trades about -0.41 of its potential returns per unit of risk. The Stronghold Digital Mining is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  496.00  in Stronghold Digital Mining on October 1, 2024 and sell it today you would lose (104.00) from holding Stronghold Digital Mining or give up 20.97% of portfolio value over 90 days.

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

Greenidge Generation Holdings  vs.  Stronghold Digital Mining

Greenidge Generation

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greenidge Generation Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Greenidge Generation is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Stronghold Digital Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stronghold Digital Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Stronghold Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Greenidge Generation and Stronghold Digital

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

The idea behind Greenidge Generation Holdings and Stronghold Digital 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.