Correlation Between Valneva SE and Cocrystal Pharma

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

Diversification Opportunities for Valneva SE and Cocrystal Pharma

-0.57

Correlation Coefficient

Valneva SE  Cocrystal Pharma

Excellent diversification

The 3 months correlation between Valneva and Cocrystal is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Cocrystal Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cocrystal Pharma 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 Cocrystal Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cocrystal Pharma has no effect on the direction of Valneva SE i.e., Valneva SE and Cocrystal Pharma go up and down completely randomly.

Pair Corralation between Valneva SE and Cocrystal Pharma

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Cocrystal Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.27 times less risky than Cocrystal Pharma. The stock trades about -0.08 of its potential returns per unit of risk. The Cocrystal Pharma is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  176.00  in Cocrystal Pharma on September 25, 2024 and sell it today you would earn a total of  93.00  from holding Cocrystal Pharma or generate 52.84% return on investment over 90 days.

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

Valneva SE ADR  vs.  Cocrystal Pharma

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 unsteady 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.

Cocrystal Pharma

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cocrystal Pharma are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental indicators, Cocrystal Pharma reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valneva SE and Cocrystal Pharma

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

The idea behind Valneva SE ADR and Cocrystal Pharma 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.