Correlation Between Hut 8 and Choice Properties

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

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

Diversification Opportunities for Hut 8 and Choice Properties

-0.87

Correlation Coefficient

Hut 8  Choice Properties

Pay attention - limited upside

The 3 months correlation between Hut and Choice is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hut 8 Mining and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real and Hut 8 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 Hut 8 Mining are associated (or correlated) with Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of Hut 8 i.e., Hut 8 and Choice Properties go up and down completely randomly.

Pair Corralation between Hut 8 and Choice Properties

Assuming the 90 days trading horizon Hut 8 Mining is expected to generate 6.84 times more return on investment than Choice Properties. However, Hut 8 is 6.84 times more volatile than Choice Properties Real. It trades about -0.01 of its potential returns per unit of risk. Choice Properties Real is currently generating about -0.14 per unit of risk. If you would invest  3,624  in Hut 8 Mining on September 23, 2024 and sell it today you would lose (224.00) from holding Hut 8 Mining or give up 6.18% of portfolio value over 90 days.

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

Hut 8 Mining  vs.  Choice Properties Real

Hut 8 Mining

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hut 8 Mining are ranked lower than 16 (%) 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.

Choice Properties Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choice Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hut 8 and Choice Properties

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

The idea behind Hut 8 Mining and Choice Properties Real 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.