Correlation Between Vale SA and Annexon

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

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

Diversification Opportunities for Vale SA and Annexon

0.44

Correlation Coefficient

Vale SA  Annexon

Very weak diversification

The 3 months correlation between Vale and Annexon is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA ADR and Annexon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annexon and Vale SA 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 Vale SA ADR are associated (or correlated) with Annexon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annexon has no effect on the direction of Vale SA i.e., Vale SA and Annexon go up and down completely randomly.

Pair Corralation between Vale SA and Annexon

Given the investment horizon of 90 days Vale SA is expected to generate 26.74 times less return on investment than Annexon. But when comparing it to its historical volatility, Vale SA ADR is 3.02 times less risky than Annexon. It trades about 0.0 of its potential returns per unit of risk. Annexon is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  288.00  in Annexon on May 6, 2025 and sell it today you would lose (35.00) from holding Annexon or give up 12.15% of portfolio value over 90 days.

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

Vale SA ADR  vs.  Annexon

Vale SA ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Vale SA may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Annexon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Annexon are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Annexon showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vale SA and Annexon

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

The idea behind Vale SA ADR and Annexon 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.