Correlation Between Valneva SE and Tarsus Pharmaceuticals

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

Diversification Opportunities for Valneva SE and Tarsus Pharmaceuticals

-0.84

Correlation Coefficient

Valneva SE  Tarsus Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Valneva and Tarsus is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Tarsus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarsus Pharmaceuticals 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 Tarsus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarsus Pharmaceuticals has no effect on the direction of Valneva SE i.e., Valneva SE and Tarsus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Valneva SE and Tarsus Pharmaceuticals

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Tarsus Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.27 times less risky than Tarsus Pharmaceuticals. The stock trades about -0.07 of its potential returns per unit of risk. The Tarsus Pharmaceuticals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,650  in Tarsus Pharmaceuticals on September 14, 2024 and sell it today you would earn a total of  3,458  from holding Tarsus Pharmaceuticals or generate 209.58% return on investment over 90 days.

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

Valneva SE ADR  vs.  Tarsus Pharmaceuticals

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.

Tarsus Pharmaceuticals

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tarsus Pharmaceuticals are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Tarsus Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valneva SE and Tarsus Pharmaceuticals

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

The idea behind Valneva SE ADR and Tarsus Pharmaceuticals 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.