Correlation Between Futu Holdings and Marathon Digital

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

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

Diversification Opportunities for Futu Holdings and Marathon Digital

-0.05

Correlation Coefficient

Futu Holdings  Marathon Digital

Good diversification

The 3 months correlation between Futu and Marathon is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Futu Holdings and Marathon Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Digital Holdings and Futu Holdings 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 Futu Holdings are associated (or correlated) with Marathon Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marathon Digital Holdings has no effect on the direction of Futu Holdings i.e., Futu Holdings and Marathon Digital go up and down completely randomly.

Pair Corralation between Futu Holdings and Marathon Digital

Given the investment horizon of 90 days Futu Holdings is expected to generate 1.2 times more return on investment than Marathon Digital. However, Futu Holdings is 1.2 times more volatile than Marathon Digital Holdings. It trades about 0.53 of its potential returns per unit of risk. Marathon Digital Holdings is currently generating about 0.02 per unit of risk. If you would invest  6,118  in Futu Holdings on July 5, 2024 and sell it today you would earn a total of  5,167  from holding Futu Holdings or generate 84.46% return on investment over 90 days.

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

Futu Holdings  vs.  Marathon Digital Holdings

Futu Holdings

Risk-Adjusted Performance

15 of 100

Good

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

Marathon Digital Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marathon Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Futu Holdings and Marathon Digital

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

The idea behind Futu Holdings and Marathon Digital 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 Global Correlations module to find global opportunities by holding instruments from different markets.