Correlation Between Spring Airlines and BeiGene

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

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

Diversification Opportunities for Spring Airlines and BeiGene

-0.32

Correlation Coefficient

Spring Airlines  BeiGene

Very good diversification

The 3 months correlation between Spring and BeiGene is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Spring Airlines Co and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Spring Airlines 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 Spring Airlines Co 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 Spring Airlines i.e., Spring Airlines and BeiGene go up and down completely randomly.

Pair Corralation between Spring Airlines and BeiGene

Assuming the 90 days trading horizon Spring Airlines Co is expected to under-perform the BeiGene. But the stock apears to be less risky and, when comparing its historical volatility, Spring Airlines Co is 1.66 times less risky than BeiGene. The stock trades about -0.01 of its potential returns per unit of risk. The BeiGene is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  18,038  in BeiGene on October 23, 2024 and sell it today you would earn a total of  742.00  from holding BeiGene or generate 4.11% return on investment over 90 days.

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

Spring Airlines Co  vs.  BeiGene

Spring Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spring Airlines Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Spring Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 Spring Airlines and BeiGene

The main advantage of trading using opposite Spring Airlines and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spring Airlines 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 Spring Airlines Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.