Correlation Between Valneva SE and ESSA Pharma
Can any of the company-specific risk be diversified away by investing in both Valneva SE and ESSA Pharma 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 ESSA Pharma 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 ESSA Pharma, you can compare the effects of market volatilities on Valneva SE and ESSA Pharma 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 ESSA Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and ESSA Pharma.
Diversification Opportunities for Valneva SE and ESSA Pharma
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Valneva and ESSA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and ESSA Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSA Pharma 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 ESSA Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSA Pharma has no effect on the direction of Valneva SE i.e., Valneva SE and ESSA Pharma go up and down completely randomly.
Pair Corralation between Valneva SE and ESSA Pharma
Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the ESSA Pharma. In addition to that, Valneva SE is 1.72 times more volatile than ESSA Pharma. It trades about -0.23 of its total potential returns per unit of risk. ESSA Pharma is currently generating about -0.12 per unit of volatility. If you would invest 179.00 in ESSA Pharma on September 12, 2024 and sell it today you would lose (10.00) from holding ESSA Pharma or give up 5.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valneva SE ADR vs. ESSA Pharma
Performance |
| Timeline |
| Valneva SE ADR |
| ESSA Pharma |
Valneva SE and ESSA Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valneva SE and ESSA Pharma
The main advantage of trading using opposite Valneva SE and ESSA Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE position performs unexpectedly, ESSA Pharma 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 ESSA Pharma will offset losses from the drop in ESSA Pharma's long position.| Valneva SE vs. NuCana PLC | Valneva SE vs. Sage Therapeutic | Valneva SE vs. Sellas Life Sciences | Valneva SE vs. Third Harmonic Bio |
| ESSA Pharma vs. Equillium | ESSA Pharma vs. DiaMedica Therapeutics | ESSA Pharma vs. Valneva SE ADR | ESSA Pharma vs. Vivani Medical |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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