Correlation Between Dianthus Therapeutics and Valneva SE

Can any of the company-specific risk be diversified away by investing in both Dianthus Therapeutics and Valneva SE 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 Dianthus Therapeutics and Valneva SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dianthus Therapeutics and Valneva SE ADR, you can compare the effects of market volatilities on Dianthus Therapeutics and Valneva SE 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 Dianthus Therapeutics with a short position of Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dianthus Therapeutics and Valneva SE.

Diversification Opportunities for Dianthus Therapeutics and Valneva SE

0.43

Correlation Coefficient

Dianthus Therapeutics  Valneva SE

Very weak diversification

The 3 months correlation between Dianthus and Valneva is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dianthus Therapeutics and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR and Dianthus Therapeutics 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 Dianthus Therapeutics are associated (or correlated) with Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of Dianthus Therapeutics i.e., Dianthus Therapeutics and Valneva SE go up and down completely randomly.

Pair Corralation between Dianthus Therapeutics and Valneva SE

Given the investment horizon of 90 days Dianthus Therapeutics is expected to generate 1.2 times more return on investment than Valneva SE. However, Dianthus Therapeutics is 1.2 times more volatile than Valneva SE ADR. It trades about 0.03 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.07 per unit of risk. If you would invest  2,645  in Dianthus Therapeutics on July 3, 2024 and sell it today you would earn a total of  93.00  from holding Dianthus Therapeutics or generate 3.52% return on investment over 90 days.

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

Dianthus Therapeutics  vs.  Valneva SE ADR

Dianthus Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dianthus Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Dianthus Therapeutics may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Valneva SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in November 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Dianthus Therapeutics and Valneva SE

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

The idea behind Dianthus Therapeutics and Valneva SE ADR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.