Correlation Between Changjiang Publishing and BeiGene

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

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

Diversification Opportunities for Changjiang Publishing and BeiGene

-0.64

Correlation Coefficient

Changjiang Publishing  BeiGene

Excellent diversification

The 3 months correlation between Changjiang and BeiGene is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Changjiang Publishing Media and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Changjiang Publishing 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 Changjiang Publishing Media 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 Changjiang Publishing i.e., Changjiang Publishing and BeiGene go up and down completely randomly.

Pair Corralation between Changjiang Publishing and BeiGene

Assuming the 90 days trading horizon Changjiang Publishing Media is expected to under-perform the BeiGene. But the stock apears to be less risky and, when comparing its historical volatility, Changjiang Publishing Media is 1.81 times less risky than BeiGene. The stock trades about -0.11 of its potential returns per unit of risk. The BeiGene is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  16,400  in BeiGene on December 27, 2024 and sell it today you would earn a total of  5,363  from holding BeiGene or generate 32.7% return on investment over 90 days.

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

Changjiang Publishing Media  vs.  BeiGene

Changjiang Publishing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Changjiang Publishing Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BeiGene

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 16 (%) 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 Changjiang Publishing and BeiGene

The main advantage of trading using opposite Changjiang Publishing and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changjiang Publishing 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 Changjiang Publishing Media 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.