Correlation Between Mountain and Cipher Mining

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

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

Diversification Opportunities for Mountain and Cipher Mining

-0.86

Correlation Coefficient

Mountain  Cipher Mining

Pay attention - limited upside

The 3 months correlation between Mountain and Cipher is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Mountain Co I and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Mining and Mountain 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 Mountain Co I 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 Mountain i.e., Mountain and Cipher Mining go up and down completely randomly.

Pair Corralation between Mountain and Cipher Mining

Assuming the 90 days horizon Mountain is expected to generate 5.1 times less return on investment than Cipher Mining. In addition to that, Mountain is 1.73 times more volatile than Cipher Mining. It trades about 0.02 of its total potential returns per unit of risk. Cipher Mining is currently generating about 0.17 per unit of volatility. If you would invest  89.00  in Cipher Mining on September 13, 2024 and sell it today you would earn a total of  122.00  from holding Cipher Mining or generate 137.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	20.63%
Values	Daily Returns

Mountain Co I  vs.  Cipher Mining

Mountain Co I

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Mountain Co I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Mountain showed solid returns over the last few months and may actually be approaching a breakup point.

Cipher Mining

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cipher Mining are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Cipher Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mountain and Cipher Mining

The main advantage of trading using opposite Mountain and Cipher Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mountain 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 Mountain Co I 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.