Correlation Between Valneva SE and LQwD FinTech

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

Diversification Opportunities for Valneva SE and LQwD FinTech

-0.76

Correlation Coefficient

Valneva SE  LQwD FinTech

Pay attention - limited upside

The 3 months correlation between Valneva and LQwD is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and LQwD FinTech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LQwD FinTech Corp 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 LQwD FinTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LQwD FinTech Corp has no effect on the direction of Valneva SE i.e., Valneva SE and LQwD FinTech go up and down completely randomly.

Pair Corralation between Valneva SE and LQwD FinTech

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the LQwD FinTech. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 2.67 times less risky than LQwD FinTech. The stock trades about -0.24 of its potential returns per unit of risk. The LQwD FinTech Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  115.00  in LQwD FinTech Corp on September 12, 2024 and sell it today you would earn a total of  93.00  from holding LQwD FinTech Corp or generate 80.87% return on investment over 90 days.

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

Valneva SE ADR  vs.  LQwD FinTech Corp

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.

LQwD FinTech Corp

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LQwD FinTech Corp are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, LQwD FinTech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valneva SE and LQwD FinTech

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

The idea behind Valneva SE ADR and LQwD FinTech Corp 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.