Correlation Between Valneva SE and Li Auto
Can any of the company-specific risk be diversified away by investing in both Valneva SE and Li Auto 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 Li Auto 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 Li Auto, you can compare the effects of market volatilities on Valneva SE and Li Auto 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 Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and Li Auto.
Diversification Opportunities for Valneva SE and Li Auto
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Valneva and Li Auto is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto 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 Li Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Auto has no effect on the direction of Valneva SE i.e., Valneva SE and Li Auto go up and down completely randomly.
Pair Corralation between Valneva SE and Li Auto
Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Li Auto. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.25 times less risky than Li Auto. The stock trades about -0.11 of its potential returns per unit of risk. The Li Auto is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 4,230 in Li Auto on September 14, 2024 and sell it today you would lose (2,010) from holding Li Auto or give up 47.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valneva SE ADR vs. Li Auto
Performance |
| Timeline |
| Valneva SE ADR |
| Li Auto |
Valneva SE and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valneva SE and Li Auto
The main advantage of trading using opposite Valneva SE and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE position performs unexpectedly, Li Auto 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 Li Auto will offset losses from the drop in Li Auto'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 |
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 CEOs Directory module to screen CEOs from public companies around the world.
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