Correlation Between Shannon Semiconductor and BeiGene

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

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

Diversification Opportunities for Shannon Semiconductor and BeiGene

0.83

Correlation Coefficient

Shannon Semiconductor  BeiGene

Very poor diversification

The 3 months correlation between Shannon and BeiGene is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shannon Semiconductor Technolo and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Shannon Semiconductor 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 Shannon Semiconductor Technology 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 Shannon Semiconductor i.e., Shannon Semiconductor and BeiGene go up and down completely randomly.

Pair Corralation between Shannon Semiconductor and BeiGene

Assuming the 90 days trading horizon Shannon Semiconductor is expected to generate 1.4 times less return on investment than BeiGene. In addition to that, Shannon Semiconductor is 1.58 times more volatile than BeiGene. It trades about 0.1 of its total potential returns per unit of risk. BeiGene is currently generating about 0.23 per unit of volatility. If you would invest  16,240  in BeiGene on December 26, 2024 and sell it today you would earn a total of  6,018  from holding BeiGene or generate 37.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Shannon Semiconductor Technolo  vs.  BeiGene

Shannon Semiconductor

Risk-Adjusted Performance

OK

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

BeiGene

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 17 (%) 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 Shannon Semiconductor and BeiGene

The main advantage of trading using opposite Shannon Semiconductor and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shannon Semiconductor 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 Shannon Semiconductor Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.