Correlation Between BeiGene and Legend Biotech
Can any of the company-specific risk be diversified away by investing in both BeiGene and Legend Biotech 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 Legend Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BeiGene and Legend Biotech Corp, you can compare the effects of market volatilities on BeiGene and Legend Biotech 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 Legend Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of BeiGene and Legend Biotech.
Diversification Opportunities for BeiGene and Legend Biotech
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between BeiGene and Legend is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Legend Biotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend Biotech Corp 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 Legend Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend Biotech Corp has no effect on the direction of BeiGene i.e., BeiGene and Legend Biotech go up and down completely randomly.
Pair Corralation between BeiGene and Legend Biotech
Given the investment horizon of 90 days BeiGene is expected to under-perform the Legend Biotech. But the stock apears to be less risky and, when comparing its historical volatility, BeiGene is 1.36 times less risky than Legend Biotech. The stock trades about -0.29 of its potential returns per unit of risk. The Legend Biotech Corp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 4,530 in Legend Biotech Corp on August 28, 2024 and sell it today you would lose (261.00) from holding Legend Biotech Corp or give up 5.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BeiGene vs. Legend Biotech Corp
Performance |
| Timeline |
| BeiGene |
| Legend Biotech Corp |
BeiGene and Legend Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BeiGene and Legend Biotech
The main advantage of trading using opposite BeiGene and Legend Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BeiGene position performs unexpectedly, Legend Biotech 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 Legend Biotech will offset losses from the drop in Legend Biotech's long position.| BeiGene vs. Eliem Therapeutics | BeiGene vs. HCW Biologics | BeiGene vs. Scpharmaceuticals | BeiGene vs. Milestone Pharmaceuticals |
| Legend Biotech vs. Eliem Therapeutics | Legend Biotech vs. HCW Biologics | Legend Biotech vs. Scpharmaceuticals | Legend Biotech vs. Milestone Pharmaceuticals |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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