Correlation Between CSL and BeiGene
Can any of the company-specific risk be diversified away by investing in both CSL and BeiGene 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 CSL and BeiGene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and BeiGene, you can compare the effects of market volatilities on CSL and BeiGene 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 CSL with a short position of BeiGene. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and BeiGene.
Diversification Opportunities for CSL and BeiGene
Weak diversification
The 3 months correlation between CSL and BeiGene is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CSL and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and CSL 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 CSL are associated (or correlated) with BeiGene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeiGene has no effect on the direction of CSL i.e., CSL and BeiGene go up and down completely randomly.
Pair Corralation between CSL and BeiGene
Assuming the 90 days horizon CSL is expected to under-perform the BeiGene. But the pink sheet apears to be less risky and, when comparing its historical volatility, CSL is 1.88 times less risky than BeiGene. The pink sheet trades about -0.14 of its potential returns per unit of risk. The BeiGene is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 20,599 in BeiGene on August 31, 2024 and sell it today you would earn a total of 17.00 from holding BeiGene or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSL vs. BeiGene
Performance |
| Timeline |
| CSL |
| BeiGene |
CSL and BeiGene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and BeiGene
The main advantage of trading using opposite CSL and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, BeiGene 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 BeiGene will offset losses from the drop in BeiGene's long position.The idea behind CSL and BeiGene 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.| BeiGene vs. Ascendis Pharma AS | BeiGene vs. Apellis Pharmaceuticals | BeiGene vs. Akero Therapeutics | BeiGene vs. Blueprint Medicines Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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