Correlation Between BeiGene and Xingguang Agricultural

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

Diversification Opportunities for BeiGene and Xingguang Agricultural

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between BeiGene and Xingguang is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Xingguang Agricultural Mach in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xingguang Agricultural 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 Xingguang Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xingguang Agricultural has no effect on the direction of BeiGene i.e., BeiGene and Xingguang Agricultural go up and down completely randomly.

Pair Corralation between BeiGene and Xingguang Agricultural

Assuming the 90 days trading horizon BeiGene is expected to generate 0.61 times more return on investment than Xingguang Agricultural. However, BeiGene is 1.64 times less risky than Xingguang Agricultural. It trades about -0.14 of its potential returns per unit of risk. Xingguang Agricultural Mach is currently generating about -0.12 per unit of risk. If you would invest  18,134  in BeiGene on October 9, 2024 and sell it today you would lose (2,454) from holding BeiGene or give up 13.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BeiGene  vs.  Xingguang Agricultural Mach

 Performance 
       Timeline  
BeiGene 

Risk-Adjusted Performance

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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.
Xingguang Agricultural 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Xingguang Agricultural Mach are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Xingguang Agricultural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BeiGene and Xingguang Agricultural Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BeiGene and Xingguang Agricultural

The main advantage of trading using opposite BeiGene and Xingguang Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BeiGene position performs unexpectedly, Xingguang Agricultural 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 Xingguang Agricultural will offset losses from the drop in Xingguang Agricultural's long position.
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The idea behind BeiGene and Xingguang Agricultural Mach 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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