Correlation Between Valneva SE and KENNAMETAL

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Can any of the company-specific risk be diversified away by investing in both Valneva SE and KENNAMETAL 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 KENNAMETAL 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 KENNAMETAL INC 4625, you can compare the effects of market volatilities on Valneva SE and KENNAMETAL 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 KENNAMETAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and KENNAMETAL.

Diversification Opportunities for Valneva SE and KENNAMETAL

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Valneva and KENNAMETAL is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and KENNAMETAL INC 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC 4625 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 KENNAMETAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENNAMETAL INC 4625 has no effect on the direction of Valneva SE i.e., Valneva SE and KENNAMETAL go up and down completely randomly.

Pair Corralation between Valneva SE and KENNAMETAL

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the KENNAMETAL. In addition to that, Valneva SE is 4.94 times more volatile than KENNAMETAL INC 4625. It trades about -0.05 of its total potential returns per unit of risk. KENNAMETAL INC 4625 is currently generating about 0.01 per unit of volatility. If you would invest  9,644  in KENNAMETAL INC 4625 on September 3, 2024 and sell it today you would earn a total of  166.00  from holding KENNAMETAL INC 4625 or generate 1.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy68.28%
ValuesDaily Returns

Valneva SE ADR  vs.  KENNAMETAL INC 4625

 Performance 
       Timeline  
Valneva SE ADR 

Risk-Adjusted Performance

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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.
KENNAMETAL INC 4625 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days KENNAMETAL INC 4625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KENNAMETAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Valneva SE and KENNAMETAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Valneva SE and KENNAMETAL

The main advantage of trading using opposite Valneva SE and KENNAMETAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE position performs unexpectedly, KENNAMETAL 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 KENNAMETAL will offset losses from the drop in KENNAMETAL's long position.
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The idea behind Valneva SE ADR and KENNAMETAL INC 4625 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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