Correlation Between BeiGene and Shenzhen RoadRover

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Can any of the company-specific risk be diversified away by investing in both BeiGene and Shenzhen RoadRover 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 RoadRover into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BeiGene and Shenzhen RoadRover Technology, you can compare the effects of market volatilities on BeiGene and Shenzhen RoadRover 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 RoadRover. Check out your portfolio center. Please also check ongoing floating volatility patterns of BeiGene and Shenzhen RoadRover.

Diversification Opportunities for BeiGene and Shenzhen RoadRover

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between BeiGene and Shenzhen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Shenzhen RoadRover Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen RoadRover 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 RoadRover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen RoadRover has no effect on the direction of BeiGene i.e., BeiGene and Shenzhen RoadRover go up and down completely randomly.

Pair Corralation between BeiGene and Shenzhen RoadRover

Assuming the 90 days trading horizon BeiGene is expected to generate 1.47 times less return on investment than Shenzhen RoadRover. In addition to that, BeiGene is 1.07 times more volatile than Shenzhen RoadRover Technology. It trades about 0.06 of its total potential returns per unit of risk. Shenzhen RoadRover Technology is currently generating about 0.1 per unit of volatility. If you would invest  2,166  in Shenzhen RoadRover Technology on September 19, 2024 and sell it today you would earn a total of  340.00  from holding Shenzhen RoadRover Technology or generate 15.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

BeiGene  vs.  Shenzhen RoadRover Technology

 Performance 
       Timeline  
BeiGene 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
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.
Shenzhen RoadRover 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen RoadRover Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen RoadRover sustained solid returns over the last few months and may actually be approaching a breakup point.

BeiGene and Shenzhen RoadRover Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BeiGene and Shenzhen RoadRover

The main advantage of trading using opposite BeiGene and Shenzhen RoadRover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BeiGene position performs unexpectedly, Shenzhen RoadRover 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 RoadRover will offset losses from the drop in Shenzhen RoadRover's long position.
The idea behind BeiGene and Shenzhen RoadRover Technology 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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