Correlation Between BeiGene and Fujian Longzhou

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

Diversification Opportunities for BeiGene and Fujian Longzhou

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between BeiGene and Fujian is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Fujian Longzhou Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Longzhou Tran and BeiGene 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 BeiGene are associated (or correlated) with Fujian Longzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Longzhou Tran has no effect on the direction of BeiGene i.e., BeiGene and Fujian Longzhou go up and down completely randomly.

Pair Corralation between BeiGene and Fujian Longzhou

Assuming the 90 days trading horizon BeiGene is expected to generate 0.79 times more return on investment than Fujian Longzhou. However, BeiGene is 1.26 times less risky than Fujian Longzhou. It trades about 0.32 of its potential returns per unit of risk. Fujian Longzhou Transportation is currently generating about -0.04 per unit of risk. If you would invest  16,100  in BeiGene on October 23, 2024 and sell it today you would earn a total of  2,680  from holding BeiGene or generate 16.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BeiGene  vs.  Fujian Longzhou Transportation

 Performance 
       Timeline  
BeiGene 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BeiGene is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Fujian Longzhou Tran 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Longzhou Transportation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Longzhou may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BeiGene and Fujian Longzhou Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BeiGene and Fujian Longzhou

The main advantage of trading using opposite BeiGene and Fujian Longzhou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BeiGene position performs unexpectedly, Fujian Longzhou 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 Fujian Longzhou will offset losses from the drop in Fujian Longzhou's long position.
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The idea behind BeiGene and Fujian Longzhou Transportation 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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