Correlation Between Vine Hill and Graf Global

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

Diversification Opportunities for Vine Hill and Graf Global

-0.27

Correlation Coefficient

Vine Hill  Graf Global

Very good diversification

The 3 months correlation between Vine and Graf is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vine Hill Capital and Graf Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graf Global Corp 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 Graf Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graf Global Corp has no effect on the direction of Vine Hill i.e., Vine Hill and Graf Global go up and down completely randomly.

Pair Corralation between Vine Hill and Graf Global

Given the investment horizon of 90 days Vine Hill Capital is expected to generate 0.41 times more return on investment than Graf Global. However, Vine Hill Capital is 2.44 times less risky than Graf Global. It trades about 0.23 of its potential returns per unit of risk. Graf Global Corp is currently generating about 0.06 per unit of risk. If you would invest  996.00  in Vine Hill Capital on September 5, 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 Against
Strength	Insignificant
Accuracy	33.77%
Values	Daily Returns

Vine Hill Capital  vs.  Graf Global Corp

Vine Hill Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vine Hill Capital are ranked lower than 17 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Graf Global Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graf Global Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Graf Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vine Hill and Graf Global

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

The idea behind Vine Hill Capital and Graf Global Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.