Correlation Between Lion Financial and Hut 8

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

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

Diversification Opportunities for Lion Financial and Hut 8

-0.08

Correlation Coefficient

Lion Financial  Hut 8

Good diversification

The 3 months correlation between Lion and Hut is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group and Hut 8 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hut 8 Corp and Lion Financial 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 Lion Financial Group are associated (or correlated) with Hut 8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hut 8 Corp has no effect on the direction of Lion Financial i.e., Lion Financial and Hut 8 go up and down completely randomly.

Pair Corralation between Lion Financial and Hut 8

Assuming the 90 days horizon Lion Financial Group is expected to generate 2.83 times more return on investment than Hut 8. However, Lion Financial is 2.83 times more volatile than Hut 8 Corp. It trades about 0.06 of its potential returns per unit of risk. Hut 8 Corp is currently generating about 0.02 per unit of risk. If you would invest  0.67  in Lion Financial Group on February 17, 2024 and sell it today you would lose (0.10) from holding Lion Financial Group or give up 14.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.94%
Values	Daily Returns

Lion Financial Group  vs.  Hut 8 Corp

Lion Financial Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lion Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Lion Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Hut 8 Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hut 8 Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hut 8 is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lion Financial and Hut 8

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

The idea behind Lion Financial Group and Hut 8 Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.