Correlation Between BeiGene and Shenzhen Silver

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

Diversification Opportunities for BeiGene and Shenzhen Silver

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between BeiGene and Shenzhen is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Shenzhen Silver Basis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Silver Basis 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 Shenzhen Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Silver Basis has no effect on the direction of BeiGene i.e., BeiGene and Shenzhen Silver go up and down completely randomly.

Pair Corralation between BeiGene and Shenzhen Silver

Assuming the 90 days trading horizon BeiGene is expected to generate 0.57 times more return on investment than Shenzhen Silver. However, BeiGene is 1.77 times less risky than Shenzhen Silver. It trades about -0.3 of its potential returns per unit of risk. Shenzhen Silver Basis is currently generating about -0.7 per unit of risk. If you would invest  16,891  in BeiGene on October 9, 2024 and sell it today you would lose (1,211) from holding BeiGene or give up 7.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

BeiGene  vs.  Shenzhen Silver Basis

 Performance 
       Timeline  
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.
Shenzhen Silver Basis 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shenzhen Silver Basis 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.

BeiGene and Shenzhen Silver Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BeiGene and Shenzhen Silver

The main advantage of trading using opposite BeiGene and Shenzhen Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BeiGene position performs unexpectedly, Shenzhen Silver 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 Shenzhen Silver will offset losses from the drop in Shenzhen Silver's long position.
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The idea behind BeiGene and Shenzhen Silver Basis 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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