Correlation Between Stronghold Digital and Greenidge Generation

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

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

Diversification Opportunities for Stronghold Digital and Greenidge Generation

0.55

Correlation Coefficient

Stronghold Digital  Greenidge Generation

Very weak diversification

The 3 months correlation between Stronghold and Greenidge is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Stronghold Digital Mining and Greenidge Generation Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenidge Generation and Stronghold 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 Stronghold Digital Mining are associated (or correlated) with Greenidge Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenidge Generation has no effect on the direction of Stronghold Digital i.e., Stronghold Digital and Greenidge Generation go up and down completely randomly.

Pair Corralation between Stronghold Digital and Greenidge Generation

Given the investment horizon of 90 days Stronghold Digital Mining is expected to generate 1.34 times more return on investment than Greenidge Generation. However, Stronghold Digital is 1.34 times more volatile than Greenidge Generation Holdings. It trades about 0.04 of its potential returns per unit of risk. Greenidge Generation Holdings is currently generating about -0.01 per unit of risk. If you would invest  419.00  in Stronghold Digital Mining on September 21, 2024 and sell it today you would lose (9.00) from holding Stronghold Digital Mining or give up 2.15% of portfolio value over 90 days.

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

Stronghold Digital Mining  vs.  Greenidge Generation Holdings

Stronghold Digital Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stronghold Digital Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Stronghold Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Greenidge Generation

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Greenidge Generation Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Greenidge Generation exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stronghold Digital and Greenidge Generation

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

The idea behind Stronghold Digital Mining and Greenidge Generation Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.