Correlation Between Valneva SE and Disc Medicine

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

Diversification Opportunities for Valneva SE and Disc Medicine

-0.84

Correlation Coefficient

Valneva SE  Disc Medicine

Pay attention - limited upside

The 3 months correlation between Valneva and Disc is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Disc Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Disc Medicine 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 Disc Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Disc Medicine has no effect on the direction of Valneva SE i.e., Valneva SE and Disc Medicine go up and down completely randomly.

Pair Corralation between Valneva SE and Disc Medicine

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Disc Medicine. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.03 times less risky than Disc Medicine. The stock trades about -0.01 of its potential returns per unit of risk. The Disc Medicine is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,249  in Disc Medicine on December 2, 2024 and sell it today you would earn a total of  3,369  from holding Disc Medicine or generate 149.8% 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.  Disc Medicine

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.

Disc Medicine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Disc Medicine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Valneva SE and Disc Medicine

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

The idea behind Valneva SE ADR and Disc Medicine 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.