Correlation Between Evoke Pharma and Valneva SE

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

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

Diversification Opportunities for Evoke Pharma and Valneva SE

0.79

Correlation Coefficient

Evoke Pharma  Valneva SE

Poor diversification

The 3 months correlation between Evoke and Valneva is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Evoke Pharma 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 Evoke Pharma 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 Evoke Pharma 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 Evoke Pharma i.e., Evoke Pharma and Valneva SE go up and down completely randomly.

Pair Corralation between Evoke Pharma and Valneva SE

Given the investment horizon of 90 days Evoke Pharma is expected to under-perform the Valneva SE. But the stock apears to be less risky and, when comparing its historical volatility, Evoke Pharma is 1.06 times less risky than Valneva SE. The stock trades about -0.19 of its potential returns per unit of risk. The Valneva SE ADR is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  404.00  in Valneva SE ADR on October 23, 2024 and sell it today you would earn a total of  67.00  from holding Valneva SE ADR or generate 16.58% return on investment over 90 days.

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

Evoke Pharma  vs.  Valneva SE ADR

Evoke Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evoke Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Evoke Pharma is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Evoke Pharma and Valneva SE

The main advantage of trading using opposite Evoke Pharma and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evoke Pharma 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 Evoke Pharma 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 Transaction History module to view history of all your transactions and understand their impact on performance.