Correlation Between Valneva SE and Seres Therapeutics

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

Diversification Opportunities for Valneva SE and Seres Therapeutics

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Valneva and Seres is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Seres Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seres Therapeutics 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 Seres Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seres Therapeutics has no effect on the direction of Valneva SE i.e., Valneva SE and Seres Therapeutics go up and down completely randomly.

Pair Corralation between Valneva SE and Seres Therapeutics

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Seres Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.48 times less risky than Seres Therapeutics. The stock trades about -0.08 of its potential returns per unit of risk. The Seres Therapeutics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Seres Therapeutics on October 7, 2024 and sell it today you would earn a total of  15.00  from holding Seres Therapeutics or generate 19.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Valneva SE ADR  vs.  Seres Therapeutics

 Performance 
       Timeline  
Valneva SE ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Seres Therapeutics 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Seres Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Seres Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Valneva SE and Seres Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Valneva SE and Seres Therapeutics

The main advantage of trading using opposite Valneva SE and Seres Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE position performs unexpectedly, Seres Therapeutics 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 Seres Therapeutics will offset losses from the drop in Seres Therapeutics' long position.
The idea behind Valneva SE ADR and Seres Therapeutics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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