Correlation Between Valneva SE and EON Resources

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

Diversification Opportunities for Valneva SE and EON Resources

-0.59

Correlation Coefficient

Valneva SE  EON Resources

Excellent diversification

The 3 months correlation between Valneva and EON is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and EON Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON Resources 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 EON Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON Resources has no effect on the direction of Valneva SE i.e., Valneva SE and EON Resources go up and down completely randomly.

Pair Corralation between Valneva SE and EON Resources

Given the investment horizon of 90 days Valneva SE ADR is expected to generate 0.53 times more return on investment than EON Resources. However, Valneva SE ADR is 1.88 times less risky than EON Resources. It trades about 0.18 of its potential returns per unit of risk. EON Resources is currently generating about -0.01 per unit of risk. If you would invest  433.00  in Valneva SE ADR on December 27, 2024 and sell it today you would earn a total of  283.00  from holding Valneva SE ADR or generate 65.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Valneva SE ADR  vs.  EON Resources

Valneva SE ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valneva SE ADR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Valneva SE displayed solid returns over the last few months and may actually be approaching a breakup point.

EON Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days EON Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, EON Resources is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Valneva SE and EON Resources

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

The idea behind Valneva SE ADR and EON Resources 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.