Correlation Between Centessa Pharmaceuticals and Vine Hill

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

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

Diversification Opportunities for Centessa Pharmaceuticals and Vine Hill

-0.19

Correlation Coefficient

Centessa Pharmaceuticals  Vine Hill

Good diversification

The 3 months correlation between Centessa and Vine is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Centessa Pharmaceuticals PLC and Vine Hill Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vine Hill Capital and Centessa Pharmaceuticals 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 Centessa Pharmaceuticals PLC are associated (or correlated) with Vine Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vine Hill Capital has no effect on the direction of Centessa Pharmaceuticals i.e., Centessa Pharmaceuticals and Vine Hill go up and down completely randomly.

Pair Corralation between Centessa Pharmaceuticals and Vine Hill

Given the investment horizon of 90 days Centessa Pharmaceuticals PLC is expected to under-perform the Vine Hill. In addition to that, Centessa Pharmaceuticals is 29.82 times more volatile than Vine Hill Capital. It trades about -0.05 of its total potential returns per unit of risk. Vine Hill Capital is currently generating about 0.19 per unit of volatility. If you would invest  1,003  in Vine Hill Capital on December 27, 2024 and sell it today you would earn a total of  15.00  from holding Vine Hill Capital or generate 1.5% return on investment over 90 days.

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

Centessa Pharmaceuticals PLC  vs.  Vine Hill Capital

Centessa Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centessa Pharmaceuticals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Vine Hill Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vine Hill Capital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Vine Hill is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Centessa Pharmaceuticals and Vine Hill

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

The idea behind Centessa Pharmaceuticals PLC and Vine Hill Capital 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.