Correlation Between Hut 8 and Cipher Mining

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

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

Diversification Opportunities for Hut 8 and Cipher Mining

0.9

Correlation Coefficient

Hut 8  Cipher Mining

Almost no diversification

The 3 months correlation between Hut and Cipher is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hut 8 Corp and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Mining 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 Corp 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 Hut 8 i.e., Hut 8 and Cipher Mining go up and down completely randomly.

Pair Corralation between Hut 8 and Cipher Mining

Considering the 90-day investment horizon Hut 8 Corp is expected to generate 0.89 times more return on investment than Cipher Mining. However, Hut 8 Corp is 1.12 times less risky than Cipher Mining. It trades about 0.28 of its potential returns per unit of risk. Cipher Mining is currently generating about 0.16 per unit of risk. If you would invest  1,011  in Hut 8 Corp on August 30, 2024 and sell it today you would earn a total of  1,834  from holding Hut 8 Corp or generate 181.4% return on investment over 90 days.

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

Hut 8 Corp  vs.  Cipher Mining

Hut 8 Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hut 8 Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Hut 8 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cipher Mining

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cipher Mining are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Cipher Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hut 8 and Cipher Mining

The main advantage of trading using opposite Hut 8 and Cipher Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hut 8 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 Hut 8 Corp 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.