Correlation Between BeiGene and Qiaoyin Environmental

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

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

Diversification Opportunities for BeiGene and Qiaoyin Environmental

0.21

Correlation Coefficient

BeiGene  Qiaoyin Environmental

Modest diversification

The 3 months correlation between BeiGene and Qiaoyin is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Qiaoyin Environmental Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qiaoyin Environmental 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 Qiaoyin Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qiaoyin Environmental has no effect on the direction of BeiGene i.e., BeiGene and Qiaoyin Environmental go up and down completely randomly.

Pair Corralation between BeiGene and Qiaoyin Environmental

Assuming the 90 days trading horizon BeiGene is expected to generate 1.03 times more return on investment than Qiaoyin Environmental. However, BeiGene is 1.03 times more volatile than Qiaoyin Environmental Tech. It trades about 0.05 of its potential returns per unit of risk. Qiaoyin Environmental Tech is currently generating about -0.02 per unit of risk. If you would invest  17,904  in BeiGene on October 24, 2024 and sell it today you would earn a total of  1,074  from holding BeiGene or generate 6.0% return on investment over 90 days.

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

BeiGene  vs.  Qiaoyin Environmental Tech

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.

Qiaoyin Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qiaoyin Environmental Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Qiaoyin Environmental 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 Qiaoyin Environmental

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

The idea behind BeiGene and Qiaoyin Environmental Tech 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.