Correlation Between Valneva SE and Krystal Biotech

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

Diversification Opportunities for Valneva SE and Krystal Biotech

0.14

Correlation Coefficient

Valneva SE  Krystal Biotech

Average diversification

The 3 months correlation between Valneva and Krystal is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Krystal Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krystal Biotech 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 Krystal Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krystal Biotech has no effect on the direction of Valneva SE i.e., Valneva SE and Krystal Biotech go up and down completely randomly.

Pair Corralation between Valneva SE and Krystal Biotech

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Krystal Biotech. In addition to that, Valneva SE is 1.34 times more volatile than Krystal Biotech. It trades about -0.1 of its total potential returns per unit of risk. Krystal Biotech is currently generating about -0.09 per unit of volatility. If you would invest  20,719  in Krystal Biotech on October 21, 2024 and sell it today you would lose (5,880) from holding Krystal Biotech or give up 28.38% of portfolio value over 90 days.

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

Valneva SE ADR  vs.  Krystal Biotech

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.

Krystal Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Krystal Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Valneva SE and Krystal Biotech

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

The idea behind Valneva SE ADR and Krystal Biotech 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.