Correlation Between Valneva SE and Equillium

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

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

Diversification Opportunities for Valneva SE and Equillium

0.2

Correlation Coefficient

Valneva SE  Equillium

Modest diversification

The 3 months correlation between Valneva and Equillium is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Valneva SE 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 Valneva SE ADR are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Valneva SE i.e., Valneva SE and Equillium go up and down completely randomly.

Pair Corralation between Valneva SE and Equillium

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Equillium. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.64 times less risky than Equillium. The stock trades about -0.07 of its potential returns per unit of risk. The Equillium is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  66.00  in Equillium on July 3, 2024 and sell it today you would earn a total of  17.00  from holding Equillium or generate 25.76% return on investment over 90 days.

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

Valneva SE ADR  vs.  Equillium

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.

Equillium

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Equillium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valneva SE and Equillium

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

The idea behind Valneva SE ADR and Equillium 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.