Correlation Between Global X and BeiGene

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

By analyzing existing cross correlation between Global X Funds and BeiGene, you can compare the effects of market volatilities on Global X and BeiGene 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 Global X with a short position of BeiGene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BeiGene.

Diversification Opportunities for Global X and BeiGene

0.09

Correlation Coefficient

Global X  BeiGene

Significant diversification

The 3 months correlation between Global and BeiGene is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Global X 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 Global X Funds are associated (or correlated) with BeiGene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeiGene has no effect on the direction of Global X i.e., Global X and BeiGene go up and down completely randomly.

Pair Corralation between Global X and BeiGene

Assuming the 90 days trading horizon Global X Funds is expected to generate 0.49 times more return on investment than BeiGene. However, Global X Funds is 2.05 times less risky than BeiGene. It trades about 0.21 of its potential returns per unit of risk. BeiGene is currently generating about 0.01 per unit of risk. If you would invest  4,212  in Global X Funds on September 14, 2024 and sell it today you would earn a total of  788.00  from holding Global X Funds or generate 18.71% return on investment over 90 days.

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

Global X Funds  vs.  BeiGene

Global X Funds

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global X sustained solid returns over the last few months and may actually be approaching a breakup point.

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 somewhat strong technical and fundamental indicators, BeiGene is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global X and BeiGene

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

The idea behind Global X Funds and BeiGene 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.