Correlation Between Metallurgical and BeiGene

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

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

Diversification Opportunities for Metallurgical and BeiGene

0.29

Correlation Coefficient

Metallurgical  BeiGene

Modest diversification

The 3 months correlation between Metallurgical and BeiGene is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Metallurgical of and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Metallurgical 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 Metallurgical of 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 Metallurgical i.e., Metallurgical and BeiGene go up and down completely randomly.

Pair Corralation between Metallurgical and BeiGene

Assuming the 90 days trading horizon Metallurgical is expected to generate 3.43 times less return on investment than BeiGene. But when comparing it to its historical volatility, Metallurgical of is 1.46 times less risky than BeiGene. It trades about 0.01 of its potential returns per unit of risk. BeiGene is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  15,500  in BeiGene on October 9, 2024 and sell it today you would earn a total of  180.00  from holding BeiGene or generate 1.16% return on investment over 90 days.

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

Metallurgical of  vs.  BeiGene

Metallurgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metallurgical of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Metallurgical 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

0 of 100

Very Weak

Over the last 90 days BeiGene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Metallurgical and BeiGene

The main advantage of trading using opposite Metallurgical and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metallurgical 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 Metallurgical of 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.