Correlation Between Valneva SE and Assembly Biosciences

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

Diversification Opportunities for Valneva SE and Assembly Biosciences

0.29

Correlation Coefficient

Valneva SE  Assembly Biosciences

Modest diversification

The 3 months correlation between Valneva and Assembly is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Assembly Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assembly Biosciences 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 Assembly Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assembly Biosciences has no effect on the direction of Valneva SE i.e., Valneva SE and Assembly Biosciences go up and down completely randomly.

Pair Corralation between Valneva SE and Assembly Biosciences

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Assembly Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.5 times less risky than Assembly Biosciences. The stock trades about -0.26 of its potential returns per unit of risk. The Assembly Biosciences is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,804  in Assembly Biosciences on September 12, 2024 and sell it today you would lose (230.00) from holding Assembly Biosciences or give up 12.75% 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.  Assembly Biosciences

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 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.

Assembly Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assembly Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Valneva SE and Assembly Biosciences

The main advantage of trading using opposite Valneva SE and Assembly Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE position performs unexpectedly, Assembly Biosciences 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 Assembly Biosciences will offset losses from the drop in Assembly Biosciences' long position.

The idea behind Valneva SE ADR and Assembly Biosciences 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.