Correlation Between Stoke Therapeutics and BeiGene

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

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

Diversification Opportunities for Stoke Therapeutics and BeiGene

0.3

Correlation Coefficient

Stoke Therapeutics  BeiGene

Weak diversification

The 3 months correlation between Stoke and BeiGene is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Stoke Therapeutics and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Stoke 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 Stoke Therapeutics 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 Stoke Therapeutics i.e., Stoke Therapeutics and BeiGene go up and down completely randomly.

Pair Corralation between Stoke Therapeutics and BeiGene

Given the investment horizon of 90 days Stoke Therapeutics is expected to generate 1.24 times more return on investment than BeiGene. However, Stoke Therapeutics is 1.24 times more volatile than BeiGene. It trades about -0.12 of its potential returns per unit of risk. BeiGene is currently generating about -0.16 per unit of risk. If you would invest  1,257  in Stoke Therapeutics on October 6, 2024 and sell it today you would lose (108.00) from holding Stoke Therapeutics or give up 8.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Stoke Therapeutics  vs.  BeiGene

Stoke Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stoke Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Stoke Therapeutics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Stoke Therapeutics and BeiGene

The main advantage of trading using opposite Stoke Therapeutics and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoke Therapeutics 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 Stoke Therapeutics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.