Correlation Between Valneva SE and Freedom Holding

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

Diversification Opportunities for Valneva SE and Freedom Holding

-0.88

Correlation Coefficient

Valneva SE  Freedom Holding

Pay attention - limited upside

The 3 months correlation between Valneva and Freedom is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp 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 Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Valneva SE i.e., Valneva SE and Freedom Holding go up and down completely randomly.

Pair Corralation between Valneva SE and Freedom Holding

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Freedom Holding. In addition to that, Valneva SE is 1.85 times more volatile than Freedom Holding Corp. It trades about -0.09 of its total potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.07 per unit of volatility. If you would invest  9,012  in Freedom Holding Corp on October 4, 2024 and sell it today you would earn a total of  4,057  from holding Freedom Holding Corp or generate 45.02% return on investment over 90 days.

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

Valneva SE ADR  vs.  Freedom Holding Corp

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.

Freedom Holding Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valneva SE and Freedom Holding

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

The idea behind Valneva SE ADR and Freedom Holding Corp 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.