Correlation Between Valneva SE and Space Communication

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

Diversification Opportunities for Valneva SE and Space Communication

0.0

Correlation Coefficient

Valneva SE  Space Communication

Pay attention - limited upside

The 3 months correlation between Valneva and Space is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Space Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Space Communication 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 Space Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Space Communication has no effect on the direction of Valneva SE i.e., Valneva SE and Space Communication go up and down completely randomly.

Pair Corralation between Valneva SE and Space Communication

Given the investment horizon of 90 days Valneva SE ADR is expected to generate 0.94 times more return on investment than Space Communication. However, Valneva SE ADR is 1.07 times less risky than Space Communication. It trades about -0.05 of its potential returns per unit of risk. Space Communication is currently generating about -0.04 per unit of risk. If you would invest  1,519  in Valneva SE ADR on October 10, 2024 and sell it today you would lose (1,053) from holding Valneva SE ADR or give up 69.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Valneva SE ADR  vs.  Space Communication

Valneva SE ADR

Risk-Adjusted Performance

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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.

Space Communication

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Valneva SE and Space Communication

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

The idea behind Valneva SE ADR and Space Communication 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.