Correlation Between BeiGene and Spring Airlines

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

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

Diversification Opportunities for BeiGene and Spring Airlines

-0.73

Correlation Coefficient

BeiGene  Spring Airlines

Pay attention - limited upside

The 3 months correlation between BeiGene and Spring is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Spring Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Airlines 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 Spring Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Airlines has no effect on the direction of BeiGene i.e., BeiGene and Spring Airlines go up and down completely randomly.

Pair Corralation between BeiGene and Spring Airlines

Assuming the 90 days trading horizon BeiGene is expected to generate 1.46 times more return on investment than Spring Airlines. However, BeiGene is 1.46 times more volatile than Spring Airlines Co. It trades about 0.23 of its potential returns per unit of risk. Spring Airlines Co is currently generating about -0.06 per unit of risk. 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 Against
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

BeiGene  vs.  Spring Airlines Co

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.

Spring Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spring Airlines Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with BeiGene and Spring Airlines

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

The idea behind BeiGene and Spring Airlines Co 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.