Correlation Between BeiGene and Fujian Forecam

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

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

Diversification Opportunities for BeiGene and Fujian Forecam

0.42

Correlation Coefficient

BeiGene  Fujian Forecam

Very weak diversification

The 3 months correlation between BeiGene and Fujian is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Fujian Forecam Optics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Forecam Optics 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 Fujian Forecam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Forecam Optics has no effect on the direction of BeiGene i.e., BeiGene and Fujian Forecam go up and down completely randomly.

Pair Corralation between BeiGene and Fujian Forecam

Assuming the 90 days trading horizon BeiGene is expected to generate 10.22 times less return on investment than Fujian Forecam. But when comparing it to its historical volatility, BeiGene is 2.17 times less risky than Fujian Forecam. It trades about 0.05 of its potential returns per unit of risk. Fujian Forecam Optics is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,333  in Fujian Forecam Optics on September 13, 2024 and sell it today you would earn a total of  1,880  from holding Fujian Forecam Optics or generate 141.04% return on investment over 90 days.

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

BeiGene  vs.  Fujian Forecam Optics

BeiGene

Risk-Adjusted Performance

4 of 100

Modest

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 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fujian Forecam Optics

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Forecam Optics are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Forecam sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BeiGene and Fujian Forecam

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

The idea behind BeiGene and Fujian Forecam Optics 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.