Correlation Between Yunnan Jianzhijia and BeiGene

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

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

Diversification Opportunities for Yunnan Jianzhijia and BeiGene

0.44

Correlation Coefficient

Yunnan Jianzhijia  BeiGene

Very weak diversification

The 3 months correlation between Yunnan and BeiGene is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Yunnan Jianzhijia Health Chain and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Yunnan Jianzhijia 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 Yunnan Jianzhijia Health Chain 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 Yunnan Jianzhijia i.e., Yunnan Jianzhijia and BeiGene go up and down completely randomly.

Pair Corralation between Yunnan Jianzhijia and BeiGene

Assuming the 90 days trading horizon Yunnan Jianzhijia Health Chain is expected to generate 1.29 times more return on investment than BeiGene. However, Yunnan Jianzhijia is 1.29 times more volatile than BeiGene. It trades about 0.16 of its potential returns per unit of risk. BeiGene is currently generating about 0.06 per unit of risk. If you would invest  1,868  in Yunnan Jianzhijia Health Chain on September 19, 2024 and sell it today you would earn a total of  791.00  from holding Yunnan Jianzhijia Health Chain or generate 42.34% return on investment over 90 days.

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

Yunnan Jianzhijia Health Chain  vs.  BeiGene

Yunnan Jianzhijia

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yunnan Jianzhijia Health Chain are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yunnan Jianzhijia sustained solid returns over the last few months and may actually be approaching a breakup point.

BeiGene

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 4 (%) 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 Yunnan Jianzhijia and BeiGene

The main advantage of trading using opposite Yunnan Jianzhijia and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yunnan Jianzhijia 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 Yunnan Jianzhijia Health Chain 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.