Correlation Between BeiGene and Linewell Software

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

Diversification Opportunities for BeiGene and Linewell Software

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between BeiGene and Linewell is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Linewell Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linewell Software 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 Linewell Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linewell Software has no effect on the direction of BeiGene i.e., BeiGene and Linewell Software go up and down completely randomly.

Pair Corralation between BeiGene and Linewell Software

Assuming the 90 days trading horizon BeiGene is expected to generate 0.76 times more return on investment than Linewell Software. However, BeiGene is 1.31 times less risky than Linewell Software. It trades about 0.03 of its potential returns per unit of risk. Linewell Software Co is currently generating about -0.01 per unit of risk. If you would invest  15,253  in BeiGene on August 26, 2024 and sell it today you would earn a total of  1,390  from holding BeiGene or generate 9.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

BeiGene  vs.  Linewell Software Co

 Performance 
       Timeline  
BeiGene 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 4 (%) 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.
Linewell Software 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Linewell Software Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Linewell Software sustained solid returns over the last few months and may actually be approaching a breakup point.

BeiGene and Linewell Software Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BeiGene and Linewell Software

The main advantage of trading using opposite BeiGene and Linewell Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BeiGene position performs unexpectedly, Linewell Software 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 Linewell Software will offset losses from the drop in Linewell Software's long position.
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The idea behind BeiGene and Linewell Software Co 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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