Correlation Between Valens and Sequans Communications

Can any of the company-specific risk be diversified away by investing in both Valens and Sequans Communications 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 Valens and Sequans Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Valens and Sequans Communications SA, you can compare the effects of market volatilities on Valens and Sequans Communications 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 Valens with a short position of Sequans Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valens and Sequans Communications.

Diversification Opportunities for Valens and Sequans Communications

-0.64

Correlation Coefficient

Valens  Sequans Communications

Excellent diversification

The 3 months correlation between Valens and Sequans is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Valens and Sequans Communications SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequans Communications and Valens 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 Valens are associated (or correlated) with Sequans Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequans Communications has no effect on the direction of Valens i.e., Valens and Sequans Communications go up and down completely randomly.

Pair Corralation between Valens and Sequans Communications

Considering the 90-day investment horizon Valens is expected to under-perform the Sequans Communications. But the stock apears to be less risky and, when comparing its historical volatility, Valens is 2.19 times less risky than Sequans Communications. The stock trades about -0.02 of its potential returns per unit of risk. The Sequans Communications SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  366.00  in Sequans Communications SA on July 7, 2024 and sell it today you would lose (259.00) from holding Sequans Communications SA or give up 70.77% of portfolio value over 90 days.

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

Valens  vs.  Sequans Communications SA

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in November 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sequans Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sequans Communications SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sequans Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valens and Sequans Communications

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

The idea behind Valens and Sequans Communications SA 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 Anywhere module to track or share privately all of your investments from the convenience of any device.