Correlation Between Netcapital and CleanSpark

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

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

Diversification Opportunities for Netcapital and CleanSpark

-0.21

Correlation Coefficient

Netcapital  CleanSpark

Very good diversification

The 3 months correlation between Netcapital and CleanSpark is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Netcapital and CleanSpark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanSpark and Netcapital 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 Netcapital are associated (or correlated) with CleanSpark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanSpark has no effect on the direction of Netcapital i.e., Netcapital and CleanSpark go up and down completely randomly.

Pair Corralation between Netcapital and CleanSpark

Given the investment horizon of 90 days Netcapital is expected to under-perform the CleanSpark. But the stock apears to be less risky and, when comparing its historical volatility, Netcapital is 1.1 times less risky than CleanSpark. The stock trades about -0.04 of its potential returns per unit of risk. The CleanSpark is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  902.00  in CleanSpark on September 3, 2024 and sell it today you would earn a total of  533.00  from holding CleanSpark or generate 59.09% return on investment over 90 days.

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

Netcapital  vs.  CleanSpark

Netcapital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Netcapital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CleanSpark

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CleanSpark are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, CleanSpark disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Netcapital and CleanSpark

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

The idea behind Netcapital and CleanSpark 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.