Correlation Between Lion Financial and Cipher Mining

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

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

Diversification Opportunities for Lion Financial and Cipher Mining

0.39

Correlation Coefficient

Lion Financial  Cipher Mining

Weak diversification

The 3 months correlation between Lion and Cipher is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Mining and Lion Financial 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 Lion Financial Group 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 Lion Financial i.e., Lion Financial and Cipher Mining go up and down completely randomly.

Pair Corralation between Lion Financial and Cipher Mining

Assuming the 90 days horizon Lion Financial Group is expected to generate 0.92 times more return on investment than Cipher Mining. However, Lion Financial Group is 1.09 times less risky than Cipher Mining. It trades about -0.01 of its potential returns per unit of risk. Cipher Mining is currently generating about -0.12 per unit of risk. If you would invest  0.75  in Lion Financial Group on December 19, 2024 and sell it today you would lose (0.11) from holding Lion Financial Group or give up 14.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Lion Financial Group  vs.  Cipher Mining

Lion Financial Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lion Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Lion Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cipher Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cipher Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Lion Financial and Cipher Mining

The main advantage of trading using opposite Lion Financial and Cipher Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Financial 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 Lion Financial Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.