Correlation Between Valneva SE and OZ Minerals

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

Diversification Opportunities for Valneva SE and OZ Minerals

-0.24

Correlation Coefficient

Valneva SE  OZ Minerals

Very good diversification

The 3 months correlation between Valneva and OZMLF is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and OZ Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OZ Minerals Limited 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 OZ Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OZ Minerals Limited has no effect on the direction of Valneva SE i.e., Valneva SE and OZ Minerals go up and down completely randomly.

Pair Corralation between Valneva SE and OZ Minerals

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the OZ Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.16 times less risky than OZ Minerals. The stock trades about -0.05 of its potential returns per unit of risk. The OZ Minerals Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,728  in OZ Minerals Limited on September 19, 2024 and sell it today you would earn a total of  172.00  from holding OZ Minerals Limited or generate 9.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	19.35%
Values	Daily Returns

Valneva SE ADR  vs.  OZ Minerals Limited

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

OZ Minerals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OZ Minerals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, OZ Minerals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Valneva SE and OZ Minerals

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

The idea behind Valneva SE ADR and OZ Minerals Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.