Correlation Between Yindu Kitchen and BeiGene

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

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

Diversification Opportunities for Yindu Kitchen and BeiGene

0.64

Correlation Coefficient

Yindu Kitchen  BeiGene

Poor diversification

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

Pair Corralation between Yindu Kitchen and BeiGene

Assuming the 90 days trading horizon Yindu Kitchen is expected to generate 3.65 times less return on investment than BeiGene. But when comparing it to its historical volatility, Yindu Kitchen Equipment is 1.28 times less risky than BeiGene. It trades about 0.04 of its potential returns per unit of risk. BeiGene is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  14,600  in BeiGene on October 24, 2024 and sell it today you would earn a total of  4,378  from holding BeiGene or generate 29.99% return on investment over 90 days.

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

Yindu Kitchen Equipment  vs.  BeiGene

Yindu Kitchen Equipment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yindu Kitchen Equipment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Yindu Kitchen 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

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 Yindu Kitchen and BeiGene

The main advantage of trading using opposite Yindu Kitchen and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yindu Kitchen 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 Yindu Kitchen Equipment 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 Transaction History module to view history of all your transactions and understand their impact on performance.