Correlation Between Nokian Renkaat and Valneva SE

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

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

Diversification Opportunities for Nokian Renkaat and Valneva SE

-0.88

Correlation Coefficient

Nokian Renkaat  Valneva SE

Pay attention - limited upside

The 3 months correlation between Nokian and Valneva is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nokian Renkaat Oyj and Valneva SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE and Nokian Renkaat 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 Nokian Renkaat Oyj 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 has no effect on the direction of Nokian Renkaat i.e., Nokian Renkaat and Valneva SE go up and down completely randomly.

Pair Corralation between Nokian Renkaat and Valneva SE

Assuming the 90 days trading horizon Nokian Renkaat Oyj is expected to under-perform the Valneva SE. But the stock apears to be less risky and, when comparing its historical volatility, Nokian Renkaat Oyj is 2.47 times less risky than Valneva SE. The stock trades about -0.07 of its potential returns per unit of risk. The Valneva SE is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  210.00  in Valneva SE on December 30, 2024 and sell it today you would earn a total of  115.00  from holding Valneva SE or generate 54.76% return on investment over 90 days.

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

Nokian Renkaat Oyj  vs.  Valneva SE

Nokian Renkaat Oyj

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nokian Renkaat Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Valneva SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valneva SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Valneva SE demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nokian Renkaat and Valneva SE

The main advantage of trading using opposite Nokian Renkaat and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokian Renkaat 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 Nokian Renkaat Oyj and Valneva SE 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..