Correlation Between Guangdong Jingyi and BeiGene

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

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

Diversification Opportunities for Guangdong Jingyi and BeiGene

0.56

Correlation Coefficient

Guangdong Jingyi  BeiGene

Very weak diversification

The 3 months correlation between Guangdong and BeiGene is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Guangdong Jingyi 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 Guangdong Jingyi Metal 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 Guangdong Jingyi i.e., Guangdong Jingyi and BeiGene go up and down completely randomly.

Pair Corralation between Guangdong Jingyi and BeiGene

Assuming the 90 days trading horizon Guangdong Jingyi Metal is expected to generate 0.84 times more return on investment than BeiGene. However, Guangdong Jingyi Metal is 1.2 times less risky than BeiGene. It trades about 0.3 of its potential returns per unit of risk. BeiGene is currently generating about 0.05 per unit of risk. If you would invest  487.00  in Guangdong Jingyi Metal on September 13, 2024 and sell it today you would earn a total of  286.00  from holding Guangdong Jingyi Metal or generate 58.73% return on investment over 90 days.

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

Guangdong Jingyi Metal  vs.  BeiGene

Guangdong Jingyi Metal

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jingyi sustained solid returns over the last few months and may actually be approaching a breakup point.

BeiGene

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 4 (%) 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 January 2025.

Pair Trading with Guangdong Jingyi and BeiGene

The main advantage of trading using opposite Guangdong Jingyi and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jingyi 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 Guangdong Jingyi Metal 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.