Correlation Between Heren Health and BeiGene

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

Diversification Opportunities for Heren Health and BeiGene

-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between Heren and BeiGene is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Heren Health Co and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Heren Health 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 Heren Health Co 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 Heren Health i.e., Heren Health and BeiGene go up and down completely randomly.

Pair Corralation between Heren Health and BeiGene

Assuming the 90 days trading horizon Heren Health Co is expected to generate 3.0 times more return on investment than BeiGene. However, Heren Health is 3.0 times more volatile than BeiGene. It trades about -0.03 of its potential returns per unit of risk. BeiGene is currently generating about -0.31 per unit of risk. If you would invest  1,420  in Heren Health Co on October 10, 2024 and sell it today you would lose (51.00) from holding Heren Health Co or give up 3.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Heren Health Co  vs.  BeiGene

 Performance 
       Timeline  
Heren Health 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Heren Health Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heren Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.
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.

Heren Health and BeiGene Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Heren Health and BeiGene

The main advantage of trading using opposite Heren Health and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heren Health 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 Heren Health Co 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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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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