Correlation Between Stronghold Digital and Mawson Infrastructure

Can any of the company-specific risk be diversified away by investing in both Stronghold Digital and Mawson Infrastructure 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 Mawson Infrastructure 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 Mawson Infrastructure Group, you can compare the effects of market volatilities on Stronghold Digital and Mawson Infrastructure 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 Mawson Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stronghold Digital and Mawson Infrastructure.

Diversification Opportunities for Stronghold Digital and Mawson Infrastructure

0.56

Correlation Coefficient

Stronghold Digital  Mawson Infrastructure

Very weak diversification

The 3 months correlation between Stronghold and Mawson is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Stronghold Digital Mining and Mawson Infrastructure Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mawson Infrastructure 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 Mawson Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mawson Infrastructure has no effect on the direction of Stronghold Digital i.e., Stronghold Digital and Mawson Infrastructure go up and down completely randomly.

Pair Corralation between Stronghold Digital and Mawson Infrastructure

Given the investment horizon of 90 days Stronghold Digital is expected to generate 2.82 times less return on investment than Mawson Infrastructure. But when comparing it to its historical volatility, Stronghold Digital Mining is 2.47 times less risky than Mawson Infrastructure. It trades about 0.07 of its potential returns per unit of risk. Mawson Infrastructure Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  123.00  in Mawson Infrastructure Group on September 18, 2024 and sell it today you would lose (2.00) from holding Mawson Infrastructure Group or give up 1.63% 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.  Mawson Infrastructure Group

Stronghold Digital Mining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stronghold Digital Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Stronghold Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Mawson Infrastructure

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mawson Infrastructure Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Mawson Infrastructure demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stronghold Digital and Mawson Infrastructure

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

The idea behind Stronghold Digital Mining and Mawson Infrastructure Group 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.