Correlation Between Hut 8 and Bluesky Digital

Can any of the company-specific risk be diversified away by investing in both Hut 8 and Bluesky Digital 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 Hut 8 and Bluesky Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hut 8 Corp and Bluesky Digital Assets, you can compare the effects of market volatilities on Hut 8 and Bluesky Digital 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 Hut 8 with a short position of Bluesky Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hut 8 and Bluesky Digital.

Diversification Opportunities for Hut 8 and Bluesky Digital

0.81

Correlation Coefficient

Hut 8  Bluesky Digital

Very poor diversification

The 3 months correlation between Hut and Bluesky is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hut 8 Corp and Bluesky Digital Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluesky Digital Assets and Hut 8 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 Hut 8 Corp are associated (or correlated) with Bluesky Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluesky Digital Assets has no effect on the direction of Hut 8 i.e., Hut 8 and Bluesky Digital go up and down completely randomly.

Pair Corralation between Hut 8 and Bluesky Digital

Considering the 90-day investment horizon Hut 8 is expected to generate 3.74 times less return on investment than Bluesky Digital. But when comparing it to its historical volatility, Hut 8 Corp is 5.43 times less risky than Bluesky Digital. It trades about 0.28 of its potential returns per unit of risk. Bluesky Digital Assets is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4.60  in Bluesky Digital Assets on September 4, 2024 and sell it today you would earn a total of  25.40  from holding Bluesky Digital Assets or generate 552.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Hut 8 Corp  vs.  Bluesky Digital Assets

Hut 8 Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hut 8 Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Hut 8 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bluesky Digital Assets

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bluesky Digital Assets are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bluesky Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hut 8 and Bluesky Digital

The main advantage of trading using opposite Hut 8 and Bluesky Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hut 8 position performs unexpectedly, Bluesky Digital 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 Bluesky Digital will offset losses from the drop in Bluesky Digital's long position.

The idea behind Hut 8 Corp and Bluesky Digital Assets 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.