Correlation Between Valneva SE and Mitsubishi Chemical

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

Diversification Opportunities for Valneva SE and Mitsubishi Chemical

0.85

Correlation Coefficient

Valneva SE  Mitsubishi Chemical

Very poor diversification

The 3 months correlation between Valneva and Mitsubishi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Mitsubishi Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Chemical 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 Mitsubishi Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Chemical has no effect on the direction of Valneva SE i.e., Valneva SE and Mitsubishi Chemical go up and down completely randomly.

Pair Corralation between Valneva SE and Mitsubishi Chemical

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Mitsubishi Chemical. In addition to that, Valneva SE is 1.02 times more volatile than Mitsubishi Chemical Holdings. It trades about -0.04 of its total potential returns per unit of risk. Mitsubishi Chemical Holdings is currently generating about 0.02 per unit of volatility. If you would invest  525.00  in Mitsubishi Chemical Holdings on October 26, 2024 and sell it today you would earn a total of  32.00  from holding Mitsubishi Chemical Holdings or generate 6.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	64.78%
Values	Daily Returns

Valneva SE ADR  vs.  Mitsubishi Chemical Holdings

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.

Mitsubishi Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi Chemical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Valneva SE and Mitsubishi Chemical

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

The idea behind Valneva SE ADR and Mitsubishi Chemical Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.