Correlation Between Neptune Digital and Bitfarms

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

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

Diversification Opportunities for Neptune Digital and Bitfarms

-0.21

Correlation Coefficient

Neptune Digital  Bitfarms

Very good diversification

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

Pair Corralation between Neptune Digital and Bitfarms

Assuming the 90 days horizon Neptune Digital Assets is expected to generate 1.89 times more return on investment than Bitfarms. However, Neptune Digital is 1.89 times more volatile than Bitfarms. It trades about 0.12 of its potential returns per unit of risk. Bitfarms is currently generating about -0.16 per unit of risk. If you would invest  102.00  in Neptune Digital Assets on December 31, 2024 and sell it today you would earn a total of  60.00  from holding Neptune Digital Assets or generate 58.82% return on investment over 90 days.

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

Neptune Digital Assets  vs.  Bitfarms

Neptune Digital Assets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neptune Digital Assets are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Neptune Digital showed solid returns over the last few months and may actually be approaching a breakup point.

Bitfarms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitfarms has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Neptune Digital and Bitfarms

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

The idea behind Neptune Digital Assets and Bitfarms 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.