Correlation Between Beam Therapeutics and EnGene Holdings

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

By analyzing existing cross correlation between Beam Therapeutics and enGene Holdings Common, you can compare the effects of market volatilities on Beam Therapeutics and EnGene Holdings 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 Beam Therapeutics with a short position of EnGene Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beam Therapeutics and EnGene Holdings.

Diversification Opportunities for Beam Therapeutics and EnGene Holdings

-0.22

Correlation Coefficient

Beam Therapeutics  EnGene Holdings

Very good diversification

The 3 months correlation between Beam and EnGene is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Beam Therapeutics and enGene Holdings Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enGene Holdings Common and Beam Therapeutics 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 Beam Therapeutics are associated (or correlated) with EnGene Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enGene Holdings Common has no effect on the direction of Beam Therapeutics i.e., Beam Therapeutics and EnGene Holdings go up and down completely randomly.

Pair Corralation between Beam Therapeutics and EnGene Holdings

Given the investment horizon of 90 days Beam Therapeutics is expected to generate 0.63 times more return on investment than EnGene Holdings. However, Beam Therapeutics is 1.59 times less risky than EnGene Holdings. It trades about 0.05 of its potential returns per unit of risk. enGene Holdings Common is currently generating about -0.01 per unit of risk. If you would invest  2,398  in Beam Therapeutics on September 25, 2024 and sell it today you would earn a total of  485.00  from holding Beam Therapeutics or generate 20.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Beam Therapeutics  vs.  enGene Holdings Common

Beam Therapeutics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Beam Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Beam Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

enGene Holdings Common

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in enGene Holdings Common are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, EnGene Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beam Therapeutics and EnGene Holdings

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

The idea behind Beam Therapeutics and enGene Holdings Common 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.