Connectedness between sectoral cryptos and counterpart stocks

This study examines the interconnection between sectoral cryptocurrencies and their corresponding stocks across 14 industries from 2022-2024. Using wavelet coherence, we evaluate crypto-stock interconnectedness across multiple investment frequencies and timescales and identify cross-sector patterns using k-means clustering of coherence maps. We conduct two types of analyses: (1) a within-sector dynamics, assessing time-varying connectedness between each crypto-stock pair; and (2) cross-sector grouping to uncover common regimes. Results show weak, fragmented, and short-lived in cloud computing, telecommunications, gaming and gambling, with only sporadic bursts. In contrast, supply chain and education exhibit strong, persistent long-term coherence. Insurance, cybersecurity, and e-commerce display episodic, event-driven coherence, with peaks around policy shifts and major sector news. These findings highlight that crypto-stock connectedness is sector- and horizon-dependent rather than uniform. The evidence informs sector-specific risk management, portfolio construction, and timing of tokenisation strategies, and supports more tailored regulatory oversight.This paper delivers the first systematic, sector‐level map of how cryptocurrencies and their counterpart stocks move together across fourteen industries. Using wavelet coherence and wavelet local multiple correlation over 2022-2024, and k-means clustering of the coherence maps, we uncover three distinct and policy-relevant connectedness regimes. Cluster 1: Persistent, long-horizon co-movement (notably in real estate, supply chain, and education); Cluster 2: Episodic, event-driven alignment across horizons (insurance, cybersecurity, e-commerce, travel services, and parts of real estate/energy/automotive); and Cluster 3: Weak, fragmented, short-lived links (cloud, telecommunications, gaming, gambling, and parts of healthcare/energy/automotive). The study results show that crypto-stock interdependence is shaped by sector structure and time scale. For practitioners, the taxonomy guides risk management, portfolio construction, and tokenisation strategy: treat Cluster 0 as integrated exposures requiring cycle-aware hedging; time deployments and offerings tactically in Cluster 1; and emphasise operational blockchain gains with limited market-spillover risk in Cluster 2. For regulators, evidence of persistent sectoral integration supports coordinated oversight to mitigate contagion during macro stress, while episodic sectors call for event-sensitive surveillance. Methodologically, our combined wavelet–clustering framework offers a blueprint for monitoring sectoral crypto-stock connectedness as markets evolve, enabling more tailored and data-driven decisions by investors, firms, and policymakers.