Correlation Between Ningxia Younglight and BeiGene

Can any of the company-specific risk be diversified away by investing in both Ningxia Younglight 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 Ningxia Younglight and BeiGene into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ningxia Younglight Chemicals and BeiGene, you can compare the effects of market volatilities on Ningxia Younglight 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 Ningxia Younglight with a short position of BeiGene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningxia Younglight and BeiGene.

Diversification Opportunities for Ningxia Younglight and BeiGene

-0.05

Correlation Coefficient

Ningxia Younglight  BeiGene

Good diversification

The 3 months correlation between Ningxia and BeiGene is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ningxia Younglight Chemicals and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Ningxia Younglight 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 Ningxia Younglight Chemicals 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 Ningxia Younglight i.e., Ningxia Younglight and BeiGene go up and down completely randomly.

Pair Corralation between Ningxia Younglight and BeiGene

Assuming the 90 days trading horizon Ningxia Younglight is expected to generate 9.49 times less return on investment than BeiGene. In addition to that, Ningxia Younglight is 1.36 times more volatile than BeiGene. It trades about 0.0 of its total potential returns per unit of risk. BeiGene is currently generating about 0.03 per unit of volatility. If you would invest  14,244  in BeiGene on October 5, 2024 and sell it today you would earn a total of  1,711  from holding BeiGene or generate 12.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ningxia Younglight Chemicals  vs.  BeiGene

Ningxia Younglight

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ningxia Younglight Chemicals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningxia Younglight may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BeiGene

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Ningxia Younglight and BeiGene

The main advantage of trading using opposite Ningxia Younglight and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningxia Younglight 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 Ningxia Younglight Chemicals 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.