Correlation Between Jiangxi JDL and BeiGene

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

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

Diversification Opportunities for Jiangxi JDL and BeiGene

0.37

Correlation Coefficient

Jiangxi JDL  BeiGene

Weak diversification

The 3 months correlation between Jiangxi and BeiGene is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Jiangxi JDL Environmental and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Jiangxi JDL 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 Jiangxi JDL Environmental 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 Jiangxi JDL i.e., Jiangxi JDL and BeiGene go up and down completely randomly.

Pair Corralation between Jiangxi JDL and BeiGene

Assuming the 90 days trading horizon Jiangxi JDL is expected to generate 13.2 times less return on investment than BeiGene. But when comparing it to its historical volatility, Jiangxi JDL Environmental is 2.19 times less risky than BeiGene. It trades about 0.04 of its potential returns per unit of risk. BeiGene is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  16,240  in BeiGene on December 26, 2024 and sell it today you would earn a total of  6,018  from holding BeiGene or generate 37.06% return on investment over 90 days.

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

Jiangxi JDL Environmental  vs.  BeiGene

Jiangxi JDL Environmental

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi JDL Environmental are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jiangxi JDL 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

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 17 (%) 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 Jiangxi JDL and BeiGene

The main advantage of trading using opposite Jiangxi JDL and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangxi JDL 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 Jiangxi JDL Environmental 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.