Correlation Between Masterwork Machinery and BeiGene

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

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

Diversification Opportunities for Masterwork Machinery and BeiGene

-0.15

Correlation Coefficient

Masterwork Machinery  BeiGene

Good diversification

The 3 months correlation between Masterwork and BeiGene is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Masterwork Machinery and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Masterwork Machinery 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 Masterwork Machinery 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 Masterwork Machinery i.e., Masterwork Machinery and BeiGene go up and down completely randomly.

Pair Corralation between Masterwork Machinery and BeiGene

Assuming the 90 days trading horizon Masterwork Machinery is expected to under-perform the BeiGene. In addition to that, Masterwork Machinery is 1.22 times more volatile than BeiGene. It trades about -0.05 of its total potential returns per unit of risk. BeiGene is currently generating about 0.32 per unit of volatility. If you would invest  16,100  in BeiGene on October 23, 2024 and sell it today you would earn a total of  2,680  from holding BeiGene or generate 16.65% return on investment over 90 days.

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

Masterwork Machinery  vs.  BeiGene

Masterwork Machinery

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Masterwork Machinery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Masterwork Machinery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BeiGene

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BeiGene is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Masterwork Machinery and BeiGene

The main advantage of trading using opposite Masterwork Machinery and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masterwork Machinery 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 Masterwork Machinery 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..