Correlation Between Vine Hill and New Era

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

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

Diversification Opportunities for Vine Hill and New Era

0.31

Correlation Coefficient

Vine Hill  New Era

Weak diversification

The 3 months correlation between Vine and New is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vine Hill Capital and New Era Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Era Helium and Vine Hill 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 Vine Hill Capital are associated (or correlated) with New Era. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Era Helium has no effect on the direction of Vine Hill i.e., Vine Hill and New Era go up and down completely randomly.

Pair Corralation between Vine Hill and New Era

Given the investment horizon of 90 days Vine Hill Capital is expected to generate 0.01 times more return on investment than New Era. However, Vine Hill Capital is 151.61 times less risky than New Era. It trades about 0.19 of its potential returns per unit of risk. New Era Helium is currently generating about -0.29 per unit of risk. If you would invest  999.00  in Vine Hill Capital on September 25, 2024 and sell it today you would earn a total of  4.00  from holding Vine Hill Capital or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	57.14%
Values	Daily Returns

Vine Hill Capital  vs.  New Era Helium

Vine Hill Capital

Risk-Adjusted Performance

15 of 100

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

New Era Helium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Era Helium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Vine Hill and New Era

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

The idea behind Vine Hill Capital and New Era Helium 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.