Correlation Between Shanghai Yaoji and BeiGene

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Can any of the company-specific risk be diversified away by investing in both Shanghai Yaoji and BeiGene 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 Shanghai Yaoji and BeiGene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shanghai Yaoji Playing and BeiGene, you can compare the effects of market volatilities on Shanghai Yaoji and BeiGene 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 Shanghai Yaoji with a short position of BeiGene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Yaoji and BeiGene.

Diversification Opportunities for Shanghai Yaoji and BeiGene

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Shanghai and BeiGene is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Yaoji Playing and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Shanghai Yaoji 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 Shanghai Yaoji Playing are associated (or correlated) with BeiGene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeiGene has no effect on the direction of Shanghai Yaoji i.e., Shanghai Yaoji and BeiGene go up and down completely randomly.

Pair Corralation between Shanghai Yaoji and BeiGene

Assuming the 90 days trading horizon Shanghai Yaoji Playing is expected to generate 1.28 times more return on investment than BeiGene. However, Shanghai Yaoji is 1.28 times more volatile than BeiGene. It trades about 0.07 of its potential returns per unit of risk. BeiGene is currently generating about 0.03 per unit of risk. If you would invest  1,325  in Shanghai Yaoji Playing on September 12, 2024 and sell it today you would earn a total of  1,986  from holding Shanghai Yaoji Playing or generate 149.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Shanghai Yaoji Playing  vs.  BeiGene

 Performance 
       Timeline  
Shanghai Yaoji Playing 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Yaoji Playing are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Yaoji sustained solid returns over the last few months and may actually be approaching a breakup point.
BeiGene 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BeiGene sustained solid returns over the last few months and may actually be approaching a breakup point.

Shanghai Yaoji and BeiGene Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shanghai Yaoji and BeiGene

The main advantage of trading using opposite Shanghai Yaoji and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Yaoji position performs unexpectedly, BeiGene 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 BeiGene will offset losses from the drop in BeiGene's long position.
The idea behind Shanghai Yaoji Playing and BeiGene 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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