Correlation Between YHN Acquisition and Vine Hill

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

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

Diversification Opportunities for YHN Acquisition and Vine Hill

-0.05

Correlation Coefficient

YHN Acquisition  Vine Hill

Good diversification

The 3 months correlation between YHN and Vine is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding YHN Acquisition I 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 YHN Acquisition 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 YHN Acquisition I 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 YHN Acquisition i.e., YHN Acquisition and Vine Hill go up and down completely randomly.

Pair Corralation between YHN Acquisition and Vine Hill

Assuming the 90 days horizon YHN Acquisition I is expected to generate 4502.66 times more return on investment than Vine Hill. However, YHN Acquisition is 4502.66 times more volatile than Vine Hill Capital. It trades about 0.31 of its potential returns per unit of risk. Vine Hill Capital is currently generating about 0.24 per unit of risk. If you would invest  0.00  in YHN Acquisition I on August 31, 2024 and sell it today you would earn a total of  11.00  from holding YHN Acquisition I or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	41.67%
Values	Daily Returns

YHN Acquisition I  vs.  Vine Hill Capital

YHN Acquisition I

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days YHN Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively inconsistent basic indicators, YHN Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Vine Hill Capital

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vine Hill Capital are ranked lower than 18 (%) 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.

Pair Trading with YHN Acquisition and Vine Hill

The main advantage of trading using opposite YHN Acquisition and Vine Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YHN Acquisition 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 YHN Acquisition I 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.