Correlation Between BeiGene and Eastern Air

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

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

Diversification Opportunities for BeiGene and Eastern Air

-0.88

Correlation Coefficient

BeiGene  Eastern Air

Pay attention - limited upside

The 3 months correlation between BeiGene and Eastern is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Eastern Air Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Air Logistics 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 Eastern Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Air Logistics has no effect on the direction of BeiGene i.e., BeiGene and Eastern Air go up and down completely randomly.

Pair Corralation between BeiGene and Eastern Air

Assuming the 90 days trading horizon BeiGene is expected to generate 1.11 times more return on investment than Eastern Air. However, BeiGene is 1.11 times more volatile than Eastern Air Logistics. It trades about 0.23 of its potential returns per unit of risk. Eastern Air Logistics is currently generating about -0.11 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	Significant
Accuracy	98.28%
Values	Daily Returns

BeiGene  vs.  Eastern Air Logistics

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.

Eastern Air Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastern Air Logistics 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BeiGene and Eastern Air

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

The idea behind BeiGene and Eastern Air Logistics 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.