Correlation Between Hut 8 and Obayashi

Can any of the company-specific risk be diversified away by investing in both Hut 8 and Obayashi 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 Obayashi 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 Obayashi, you can compare the effects of market volatilities on Hut 8 and Obayashi 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 Obayashi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hut 8 and Obayashi.

Diversification Opportunities for Hut 8 and Obayashi

0.79

Correlation Coefficient

Hut 8  Obayashi

Poor diversification

The 3 months correlation between Hut and Obayashi is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hut 8 Corp and Obayashi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obayashi 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 Obayashi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obayashi has no effect on the direction of Hut 8 i.e., Hut 8 and Obayashi go up and down completely randomly.

Pair Corralation between Hut 8 and Obayashi

Considering the 90-day investment horizon Hut 8 Corp is expected to generate 2.76 times more return on investment than Obayashi. However, Hut 8 is 2.76 times more volatile than Obayashi. It trades about 0.2 of its potential returns per unit of risk. Obayashi is currently generating about 0.12 per unit of risk. If you would invest  1,157  in Hut 8 Corp on September 22, 2024 and sell it today you would earn a total of  1,211  from holding Hut 8 Corp or generate 104.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Hut 8 Corp  vs.  Obayashi

Hut 8 Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hut 8 Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Hut 8 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Obayashi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Obayashi are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Obayashi reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hut 8 and Obayashi

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

The idea behind Hut 8 Corp and Obayashi 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.