Correlation Between Eureka Acquisition and Vine Hill

Can any of the company-specific risk be diversified away by investing in both Eureka 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 Eureka 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 Eureka Acquisition Corp and Vine Hill Capital, you can compare the effects of market volatilities on Eureka 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 Eureka Acquisition with a short position of Vine Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eureka Acquisition and Vine Hill.

Diversification Opportunities for Eureka Acquisition and Vine Hill

-0.09

Correlation Coefficient

Eureka Acquisition  Vine Hill

Good diversification

The 3 months correlation between Eureka and Vine is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eureka Acquisition Corp 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 Eureka 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 Eureka Acquisition Corp 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 Eureka Acquisition i.e., Eureka Acquisition and Vine Hill go up and down completely randomly.

Pair Corralation between Eureka Acquisition and Vine Hill

Given the investment horizon of 90 days Eureka Acquisition Corp is expected to generate 1905.72 times more return on investment than Vine Hill. However, Eureka Acquisition is 1905.72 times more volatile than Vine Hill Capital. It trades about 0.13 of its potential returns per unit of risk. Vine Hill Capital is currently generating about 0.23 per unit of risk. If you would invest  0.00  in Eureka Acquisition Corp on September 2, 2024 and sell it today you would earn a total of  1,012  from holding Eureka Acquisition Corp or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	43.1%
Values	Daily Returns

Eureka Acquisition Corp  vs.  Vine Hill Capital

Eureka Acquisition Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eureka Acquisition Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Eureka Acquisition disclosed 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eureka Acquisition and Vine Hill

The main advantage of trading using opposite Eureka Acquisition and Vine Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eureka 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 Eureka Acquisition Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.