Correlation Between Design Therapeutics and Valneva SE

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

By analyzing existing cross correlation between Design Therapeutics and Valneva SE ADR, you can compare the effects of market volatilities on Design Therapeutics 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 Design Therapeutics with a short position of Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Design Therapeutics and Valneva SE.

Diversification Opportunities for Design Therapeutics and Valneva SE

-0.62

Correlation Coefficient

Design Therapeutics  Valneva SE

Excellent diversification

The 3 months correlation between Design and Valneva is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Design Therapeutics 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 Design Therapeutics 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 Design Therapeutics 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 Design Therapeutics i.e., Design Therapeutics and Valneva SE go up and down completely randomly.

Pair Corralation between Design Therapeutics and Valneva SE

Given the investment horizon of 90 days Design Therapeutics is expected to generate 1.52 times more return on investment than Valneva SE. However, Design Therapeutics is 1.52 times more volatile than Valneva SE ADR. It trades about 0.02 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.05 per unit of risk. If you would invest  977.00  in Design Therapeutics on September 24, 2024 and sell it today you would lose (352.00) from holding Design Therapeutics or give up 36.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Design Therapeutics  vs.  Valneva SE ADR

Design Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Design Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Design Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Valneva SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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 unsteady 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.

Pair Trading with Design Therapeutics and Valneva SE

The main advantage of trading using opposite Design Therapeutics and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Design Therapeutics 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 Design Therapeutics 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.