Correlation Between Valneva SE and Neurosense Therapeutics

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

Diversification Opportunities for Valneva SE and Neurosense Therapeutics

0.43

Correlation Coefficient

Valneva SE  Neurosense Therapeutics

Very weak diversification

The 3 months correlation between Valneva and Neurosense is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Neurosense Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neurosense 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 Neurosense Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neurosense Therapeutics has no effect on the direction of Valneva SE i.e., Valneva SE and Neurosense Therapeutics go up and down completely randomly.

Pair Corralation between Valneva SE and Neurosense Therapeutics

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Neurosense Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.5 times less risky than Neurosense Therapeutics. The stock trades about -0.11 of its potential returns per unit of risk. The Neurosense Therapeutics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Neurosense Therapeutics on October 20, 2024 and sell it today you would lose (1.00) from holding Neurosense Therapeutics or give up 0.91% of portfolio value over 90 days.

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

Valneva SE ADR  vs.  Neurosense Therapeutics

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.

Neurosense Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neurosense Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Neurosense Therapeutics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Valneva SE and Neurosense Therapeutics

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

The idea behind Valneva SE ADR and Neurosense 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.