Correlation Between Valneva SE and Nuvation Bio

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

Diversification Opportunities for Valneva SE and Nuvation Bio

ValnevaNuvationDiversified AwayValnevaNuvationDiversified Away100%
-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Valneva and Nuvation is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Nuvation Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvation Bio 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 Nuvation Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvation Bio has no effect on the direction of Valneva SE i.e., Valneva SE and Nuvation Bio go up and down completely randomly.

Pair Corralation between Valneva SE and Nuvation Bio

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Nuvation Bio. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.7 times less risky than Nuvation Bio. The stock trades about -0.26 of its potential returns per unit of risk. The Nuvation Bio is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  307.00  in Nuvation Bio on September 15, 2024 and sell it today you would lose (46.00) from holding Nuvation Bio or give up 14.98% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Valneva SE ADR  vs.  Nuvation Bio

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -40-30-20-100
JavaScript chart by amCharts 3.21.15VALN NUVB
       Timeline  
Valneva SE ADR 

Risk-Adjusted Performance

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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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec44.555.566.5
Nuvation Bio 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nuvation Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec22.22.42.62.83

Valneva SE and Nuvation Bio Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.2-3.89-2.59-1.28-0.01620.941.912.893.864.83 0.0200.0250.0300.0350.0400.0450.050
JavaScript chart by amCharts 3.21.15VALN NUVB
       Returns  

Pair Trading with Valneva SE and Nuvation Bio

The main advantage of trading using opposite Valneva SE and Nuvation Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE position performs unexpectedly, Nuvation Bio 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 Nuvation Bio will offset losses from the drop in Nuvation Bio's long position.
The idea behind Valneva SE ADR and Nuvation Bio 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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