Correlation Between Valneva SE and Monopar Therapeutics

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

Diversification Opportunities for Valneva SE and Monopar Therapeutics

-0.77

Correlation Coefficient

Valneva SE  Monopar Therapeutics

Pay attention - limited upside

The 3 months correlation between Valneva and Monopar is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Monopar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monopar Therapeutics 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 Monopar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monopar Therapeutics has no effect on the direction of Valneva SE i.e., Valneva SE and Monopar Therapeutics go up and down completely randomly.

Pair Corralation between Valneva SE and Monopar Therapeutics

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Monopar Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 27.13 times less risky than Monopar Therapeutics. The stock trades about -0.27 of its potential returns per unit of risk. The Monopar Therapeutics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  395.00  in Monopar Therapeutics on September 12, 2024 and sell it today you would earn a total of  1,891  from holding Monopar Therapeutics or generate 478.73% 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.  Monopar Therapeutics

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.

Monopar Therapeutics

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monopar Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Monopar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valneva SE and Monopar Therapeutics

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

The idea behind Valneva SE ADR and Monopar Therapeutics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.