Correlation Between BeiGene and Shenzhen Clou

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

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

Diversification Opportunities for BeiGene and Shenzhen Clou

-0.29

Correlation Coefficient

BeiGene  Shenzhen Clou

Very good diversification

The 3 months correlation between BeiGene and Shenzhen is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Shenzhen Clou Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Clou Electronics and BeiGene 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 BeiGene are associated (or correlated) with Shenzhen Clou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Clou Electronics has no effect on the direction of BeiGene i.e., BeiGene and Shenzhen Clou go up and down completely randomly.

Pair Corralation between BeiGene and Shenzhen Clou

Assuming the 90 days trading horizon BeiGene is expected to generate 0.92 times more return on investment than Shenzhen Clou. However, BeiGene is 1.09 times less risky than Shenzhen Clou. It trades about 0.05 of its potential returns per unit of risk. Shenzhen Clou Electronics is currently generating about 0.0 per unit of risk. If you would invest  13,141  in BeiGene on October 9, 2024 and sell it today you would earn a total of  2,539  from holding BeiGene or generate 19.32% return on investment over 90 days.

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

BeiGene  vs.  Shenzhen Clou Electronics

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.

Shenzhen Clou Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Clou Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen Clou is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BeiGene and Shenzhen Clou

The main advantage of trading using opposite BeiGene and Shenzhen Clou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BeiGene position performs unexpectedly, Shenzhen Clou 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 Shenzhen Clou will offset losses from the drop in Shenzhen Clou's long position.

The idea behind BeiGene and Shenzhen Clou Electronics 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.