Correlation Between Hercules Capital and Cipher Mining

Can any of the company-specific risk be diversified away by investing in both Hercules Capital and Cipher Mining 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 Hercules Capital and Cipher Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Hercules Capital and Cipher Mining

0.91

Correlation Coefficient

Hercules Capital  Cipher Mining

Almost no diversification

The 3 months correlation between Hercules and Cipher is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Mining and Hercules Capital 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 Hercules Capital are associated (or correlated) with Cipher Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipher Mining has no effect on the direction of Hercules Capital i.e., Hercules Capital and Cipher Mining go up and down completely randomly.

Pair Corralation between Hercules Capital and Cipher Mining

Given the investment horizon of 90 days Hercules Capital is expected to generate 10.62 times less return on investment than Cipher Mining. But when comparing it to its historical volatility, Hercules Capital is 8.02 times less risky than Cipher Mining. It trades about 0.06 of its potential returns per unit of risk. Cipher Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Cipher Mining on April 30, 2025 and sell it today you would earn a total of  91.00  from holding Cipher Mining or generate 227.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.78%
Values	Daily Returns

Hercules Capital  vs.  Cipher Mining

Hercules Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Hercules Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Cipher Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cipher Mining are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Cipher Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hercules Capital and Cipher Mining

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

The idea behind Hercules Capital and Cipher Mining 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.