Correlation Between BeiGene and Zhengping RoadBridge

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

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

Diversification Opportunities for BeiGene and Zhengping RoadBridge

-0.45

Correlation Coefficient

BeiGene  Zhengping RoadBridge

Very good diversification

The 3 months correlation between BeiGene and Zhengping is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Zhengping RoadBridge Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengping RoadBridge 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 Zhengping RoadBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengping RoadBridge has no effect on the direction of BeiGene i.e., BeiGene and Zhengping RoadBridge go up and down completely randomly.

Pair Corralation between BeiGene and Zhengping RoadBridge

Assuming the 90 days trading horizon BeiGene is expected to generate 0.26 times more return on investment than Zhengping RoadBridge. However, BeiGene is 3.9 times less risky than Zhengping RoadBridge. It trades about -0.3 of its potential returns per unit of risk. Zhengping RoadBridge Constr is currently generating about -0.1 per unit of risk. If you would invest  16,891  in BeiGene on October 9, 2024 and sell it today you would lose (1,211) from holding BeiGene or give up 7.17% of portfolio value over 90 days.

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

BeiGene  vs.  Zhengping RoadBridge Constr

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.

Zhengping RoadBridge

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhengping RoadBridge Constr are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhengping RoadBridge sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BeiGene and Zhengping RoadBridge

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

The idea behind BeiGene and Zhengping RoadBridge Constr 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.