Correlation Between East Money and BeiGene

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

Diversification Opportunities for East Money and BeiGene

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between East and BeiGene is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding East Money Information and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and East Money 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 East Money Information 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 East Money i.e., East Money and BeiGene go up and down completely randomly.

Pair Corralation between East Money and BeiGene

Assuming the 90 days trading horizon East Money Information is expected to under-perform the BeiGene. In addition to that, East Money is 2.24 times more volatile than BeiGene. It trades about -0.33 of its total potential returns per unit of risk. BeiGene is currently generating about -0.33 per unit of volatility. If you would invest  16,891  in BeiGene on October 10, 2024 and sell it today you would lose (1,390) from holding BeiGene or give up 8.23% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

East Money Information  vs.  BeiGene

 Performance 
       Timeline  
East Money Information 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in East Money Information are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, East Money sustained solid returns over the last few months and may actually be approaching a breakup point.
BeiGene 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BeiGene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

East Money and BeiGene Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with East Money and BeiGene

The main advantage of trading using opposite East Money and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Money 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.
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The idea behind East Money Information 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.
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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