Correlation Between Valneva SE and Grupo Aeroportuario

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

Diversification Opportunities for Valneva SE and Grupo Aeroportuario

0.7

Correlation Coefficient

Valneva SE  Grupo Aeroportuario

Poor diversification

The 3 months correlation between Valneva and Grupo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del 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 Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Valneva SE i.e., Valneva SE and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between Valneva SE and Grupo Aeroportuario

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Grupo Aeroportuario. In addition to that, Valneva SE is 1.68 times more volatile than Grupo Aeroportuario del. It trades about -0.24 of its total potential returns per unit of risk. Grupo Aeroportuario del is currently generating about -0.05 per unit of volatility. If you would invest  28,926  in Grupo Aeroportuario del on September 17, 2024 and sell it today you would lose (1,592) from holding Grupo Aeroportuario del or give up 5.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Valneva SE ADR  vs.  Grupo Aeroportuario del

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 inconsistent 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.

Grupo Aeroportuario del

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Aeroportuario del has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Grupo Aeroportuario is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Valneva SE and Grupo Aeroportuario

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

The idea behind Valneva SE ADR and Grupo Aeroportuario del 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.