Correlation Between Valneva SE and Biocardia

Can any of the company-specific risk be diversified away by investing in both Valneva SE and Biocardia 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 Biocardia 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 Biocardia, you can compare the effects of market volatilities on Valneva SE and Biocardia 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 Biocardia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and Biocardia.

Diversification Opportunities for Valneva SE and Biocardia

0.75

Correlation Coefficient

Valneva SE  Biocardia

Poor diversification

The 3 months correlation between Valneva and Biocardia is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia 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 Biocardia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biocardia has no effect on the direction of Valneva SE i.e., Valneva SE and Biocardia go up and down completely randomly.

Pair Corralation between Valneva SE and Biocardia

Given the investment horizon of 90 days Valneva SE ADR is expected to generate 0.82 times more return on investment than Biocardia. However, Valneva SE ADR is 1.21 times less risky than Biocardia. It trades about 0.17 of its potential returns per unit of risk. Biocardia is currently generating about 0.01 per unit of risk. If you would invest  393.00  in Valneva SE ADR on October 13, 2024 and sell it today you would earn a total of  61.00  from holding Valneva SE ADR or generate 15.52% return on investment over 90 days.

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

Valneva SE ADR  vs.  Biocardia

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.

Biocardia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocardia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Valneva SE and Biocardia

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

The idea behind Valneva SE ADR and Biocardia 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.