Correlation Between Hyperliquid and First Digital

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

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

Diversification Opportunities for Hyperliquid and First Digital

0.8

Correlation Coefficient

Hyperliquid  First Digital

Very poor diversification

The 3 months correlation between Hyperliquid and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hyperliquid and First Digital USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Digital USD and Hyperliquid 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 Hyperliquid are associated (or correlated) with First Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Digital USD has no effect on the direction of Hyperliquid i.e., Hyperliquid and First Digital go up and down completely randomly.

Pair Corralation between Hyperliquid and First Digital

Assuming the 90 days trading horizon Hyperliquid is expected to generate 1.0 times more return on investment than First Digital. However, Hyperliquid is 1.0 times less risky than First Digital. It trades about 0.12 of its potential returns per unit of risk. First Digital USD is currently generating about 0.11 per unit of risk. If you would invest  1,921  in Hyperliquid on April 20, 2025 and sell it today you would earn a total of  2,473  from holding Hyperliquid or generate 128.74% return on investment over 90 days.

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

Hyperliquid  vs.  First Digital USD

Hyperliquid

Risk-Adjusted Performance

OK

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

First Digital USD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Digital USD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, First Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyperliquid and First Digital

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

The idea behind Hyperliquid and First Digital USD 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.