Correlation Between Valneva SE and Avid Bioservices

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

Diversification Opportunities for Valneva SE and Avid Bioservices

-0.72

Correlation Coefficient

Valneva SE  Avid Bioservices

Pay attention - limited upside

The 3 months correlation between Valneva and Avid is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Avid Bioservices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avid Bioservices 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 Avid Bioservices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avid Bioservices has no effect on the direction of Valneva SE i.e., Valneva SE and Avid Bioservices go up and down completely randomly.

Pair Corralation between Valneva SE and Avid Bioservices

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Avid Bioservices. In addition to that, Valneva SE is 1.1 times more volatile than Avid Bioservices. It trades about -0.64 of its total potential returns per unit of risk. Avid Bioservices is currently generating about 0.32 per unit of volatility. If you would invest  1,034  in Avid Bioservices on September 4, 2024 and sell it today you would earn a total of  198.00  from holding Avid Bioservices or generate 19.15% return on investment over 90 days.

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

Valneva SE ADR  vs.  Avid Bioservices

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

Avid Bioservices

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avid Bioservices are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Avid Bioservices displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valneva SE and Avid Bioservices

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

The idea behind Valneva SE ADR and Avid Bioservices 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.