Correlation Between Songz Automobile and BeiGene

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

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

Diversification Opportunities for Songz Automobile and BeiGene

0.51

Correlation Coefficient

Songz Automobile  BeiGene

Very weak diversification

The 3 months correlation between Songz and BeiGene is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Songz Automobile Air and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Songz Automobile 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 Songz Automobile Air 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 Songz Automobile i.e., Songz Automobile and BeiGene go up and down completely randomly.

Pair Corralation between Songz Automobile and BeiGene

Assuming the 90 days trading horizon Songz Automobile Air is expected to under-perform the BeiGene. But the stock apears to be less risky and, when comparing its historical volatility, Songz Automobile Air is 1.38 times less risky than BeiGene. The stock trades about -0.04 of its potential returns per unit of risk. The BeiGene is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  15,664  in BeiGene on September 20, 2024 and sell it today you would earn a total of  794.00  from holding BeiGene or generate 5.07% return on investment over 90 days.

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

Songz Automobile Air  vs.  BeiGene

Songz Automobile Air

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Songz Automobile Air are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Songz Automobile 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 Songz Automobile and BeiGene

The main advantage of trading using opposite Songz Automobile and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songz Automobile 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 Songz Automobile Air 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.