Correlation Between BW LPG and Valneva SE
Can any of the company-specific risk be diversified away by investing in both BW LPG and Valneva SE 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 BW LPG and Valneva SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW LPG Limited and Valneva SE ADR, you can compare the effects of market volatilities on BW LPG and Valneva SE 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 BW LPG with a short position of Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW LPG and Valneva SE.
Diversification Opportunities for BW LPG and Valneva SE
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BWLP and Valneva is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BW LPG Limited and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR and BW LPG 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 BW LPG Limited are associated (or correlated) with Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of BW LPG i.e., BW LPG and Valneva SE go up and down completely randomly.
Pair Corralation between BW LPG and Valneva SE
Given the investment horizon of 90 days BW LPG is expected to generate 2.79 times less return on investment than Valneva SE. In addition to that, BW LPG is 1.21 times more volatile than Valneva SE ADR. It trades about 0.1 of its total potential returns per unit of risk. Valneva SE ADR is currently generating about 0.33 per unit of volatility. If you would invest 472.00 in Valneva SE ADR on November 3, 2024 and sell it today you would earn a total of 106.00 from holding Valneva SE ADR or generate 22.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW LPG Limited vs. Valneva SE ADR
Performance |
| Timeline |
| BW LPG Limited |
| Valneva SE ADR |
BW LPG and Valneva SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW LPG and Valneva SE
The main advantage of trading using opposite BW LPG and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW LPG position performs unexpectedly, Valneva SE 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 Valneva SE will offset losses from the drop in Valneva SE's long position.The idea behind BW LPG Limited and Valneva SE ADR 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.| Valneva SE vs. NuCana PLC | Valneva SE vs. Sage Therapeutic | Valneva SE vs. Sellas Life Sciences | Valneva SE vs. Third Harmonic Bio |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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