Correlation Between Hangzhou Guotai and BeiGene

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

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

Diversification Opportunities for Hangzhou Guotai and BeiGene

0.18

Correlation Coefficient

Hangzhou Guotai  BeiGene

Average diversification

The 3 months correlation between Hangzhou and BeiGene is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Guotai Environmental and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Hangzhou Guotai 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 Hangzhou Guotai Environmental 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 Hangzhou Guotai i.e., Hangzhou Guotai and BeiGene go up and down completely randomly.

Pair Corralation between Hangzhou Guotai and BeiGene

Assuming the 90 days trading horizon Hangzhou Guotai Environmental is expected to generate 0.88 times more return on investment than BeiGene. However, Hangzhou Guotai Environmental is 1.14 times less risky than BeiGene. It trades about 0.1 of its potential returns per unit of risk. BeiGene is currently generating about 0.05 per unit of risk. If you would invest  2,960  in Hangzhou Guotai Environmental on October 24, 2024 and sell it today you would earn a total of  384.00  from holding Hangzhou Guotai Environmental or generate 12.97% return on investment over 90 days.

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

Hangzhou Guotai Environmental  vs.  BeiGene

Hangzhou Guotai Envi

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hangzhou Guotai Environmental are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hangzhou Guotai sustained solid returns over the last few months and may actually be approaching a breakup point.

BeiGene

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 3 (%) 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 February 2025.

Pair Trading with Hangzhou Guotai and BeiGene

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

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.