Correlation Between HanS Laser and BeiGene

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

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

Diversification Opportunities for HanS Laser and BeiGene

0.12

Correlation Coefficient

HanS Laser  BeiGene

Average diversification

The 3 months correlation between HanS and BeiGene is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding HanS Laser Tech and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and HanS Laser 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 HanS Laser Tech 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 HanS Laser i.e., HanS Laser and BeiGene go up and down completely randomly.

Pair Corralation between HanS Laser and BeiGene

Assuming the 90 days trading horizon HanS Laser is expected to generate 18.97 times less return on investment than BeiGene. But when comparing it to its historical volatility, HanS Laser Tech is 1.12 times less risky than BeiGene. It trades about 0.02 of its potential returns per unit of risk. BeiGene is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  16,100  in BeiGene on October 24, 2024 and sell it today you would earn a total of  2,878  from holding BeiGene or generate 17.88% return on investment over 90 days.

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

HanS Laser Tech  vs.  BeiGene

HanS Laser Tech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HanS Laser Tech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HanS Laser may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BeiGene

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with HanS Laser and BeiGene

The main advantage of trading using opposite HanS Laser and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HanS Laser 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 HanS Laser Tech 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.