Correlation Between Valneva SE and China Pharma
Can any of the company-specific risk be diversified away by investing in both Valneva SE and China 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 China 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 China Pharma Holdings, you can compare the effects of market volatilities on Valneva SE and China 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 China Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and China Pharma.
Diversification Opportunities for Valneva SE and China Pharma
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Valneva and China is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and China Pharma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pharma Holdings 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 China Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pharma Holdings has no effect on the direction of Valneva SE i.e., Valneva SE and China Pharma go up and down completely randomly.
Pair Corralation between Valneva SE and China Pharma
Given the investment horizon of 90 days Valneva SE ADR is expected to generate 0.55 times more return on investment than China Pharma. However, Valneva SE ADR is 1.81 times less risky than China Pharma. It trades about -0.07 of its potential returns per unit of risk. China Pharma Holdings is currently generating about -0.05 per unit of risk. If you would invest 1,360 in Valneva SE ADR on October 3, 2024 and sell it today you would lose (923.00) from holding Valneva SE ADR or give up 67.87% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Valneva SE ADR vs. China Pharma Holdings
Performance |
Timeline |
Valneva SE ADR |
China Pharma Holdings |
Valneva SE and China Pharma Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Valneva SE and China Pharma
The main advantage of trading using opposite Valneva SE and China Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE position performs unexpectedly, China 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 China Pharma will offset losses from the drop in China Pharma's long position.Valneva SE vs. NuCana PLC | Valneva SE vs. Sage Therapeutic | Valneva SE vs. Sellas Life Sciences | Valneva SE vs. Third Harmonic Bio |
China Pharma vs. Universe Pharmaceuticals | China Pharma vs. Sonoma Pharmaceuticals | China Pharma vs. Akanda Corp | China Pharma vs. Halo Collective |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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