Correlation Between Valneva SE and RATH Aktiengesellscha

Can any of the company-specific risk be diversified away by investing in both Valneva SE and RATH Aktiengesellscha 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 RATH Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Valneva SE and RATH Aktiengesellschaft, you can compare the effects of market volatilities on Valneva SE and RATH Aktiengesellscha 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 RATH Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and RATH Aktiengesellscha.

Diversification Opportunities for Valneva SE and RATH Aktiengesellscha

-0.87

Correlation Coefficient

Valneva SE  RATH Aktiengesellscha

Pay attention - limited upside

The 3 months correlation between Valneva and RATH is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE and RATH Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RATH Aktiengesellschaft 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 are associated (or correlated) with RATH Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RATH Aktiengesellschaft has no effect on the direction of Valneva SE i.e., Valneva SE and RATH Aktiengesellscha go up and down completely randomly.

Pair Corralation between Valneva SE and RATH Aktiengesellscha

Assuming the 90 days trading horizon Valneva SE is expected to generate 17.47 times more return on investment than RATH Aktiengesellscha. However, Valneva SE is 17.47 times more volatile than RATH Aktiengesellschaft. It trades about 0.2 of its potential returns per unit of risk. RATH Aktiengesellschaft is currently generating about -0.2 per unit of risk. If you would invest  185.00  in Valneva SE on December 1, 2024 and sell it today you would earn a total of  153.00  from holding Valneva SE or generate 82.7% return on investment over 90 days.

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

Valneva SE  vs.  RATH Aktiengesellschaft

Valneva SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valneva SE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Valneva SE demonstrated solid returns over the last few months and may actually be approaching a breakup point.

RATH Aktiengesellschaft

Risk-Adjusted Performance

Very Weak

Over the last 90 days RATH Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, RATH Aktiengesellscha is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Valneva SE and RATH Aktiengesellscha

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

The idea behind Valneva SE and RATH Aktiengesellschaft 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.