Correlation Between Shantou Wanshun and BeiGene

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

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

Diversification Opportunities for Shantou Wanshun and BeiGene

0.84

Correlation Coefficient

Shantou Wanshun  BeiGene

Very poor diversification

The 3 months correlation between Shantou and BeiGene is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shantou Wanshun Package and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Shantou Wanshun 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 Shantou Wanshun Package 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 Shantou Wanshun i.e., Shantou Wanshun and BeiGene go up and down completely randomly.

Pair Corralation between Shantou Wanshun and BeiGene

Assuming the 90 days trading horizon Shantou Wanshun Package is expected to generate 1.25 times more return on investment than BeiGene. However, Shantou Wanshun is 1.25 times more volatile than BeiGene. It trades about 0.13 of its potential returns per unit of risk. BeiGene is currently generating about 0.11 per unit of risk. If you would invest  424.00  in Shantou Wanshun Package on September 3, 2024 and sell it today you would earn a total of  135.00  from holding Shantou Wanshun Package or generate 31.84% return on investment over 90 days.

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

Shantou Wanshun Package  vs.  BeiGene

Shantou Wanshun Package

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shantou Wanshun Package are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shantou Wanshun sustained solid returns over the last few months and may actually be approaching a breakup point.

BeiGene

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BeiGene sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shantou Wanshun and BeiGene

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