Correlation Between Zhejiang Xiantong and BeiGene

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

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

Diversification Opportunities for Zhejiang Xiantong and BeiGene

0.57

Correlation Coefficient

Zhejiang Xiantong  BeiGene

Very weak diversification

The 3 months correlation between Zhejiang and BeiGene is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Xiantong RubberPlasti and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Zhejiang Xiantong 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 Zhejiang Xiantong RubberPlastic 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 Zhejiang Xiantong i.e., Zhejiang Xiantong and BeiGene go up and down completely randomly.

Pair Corralation between Zhejiang Xiantong and BeiGene

Assuming the 90 days trading horizon Zhejiang Xiantong RubberPlastic is expected to generate 0.99 times more return on investment than BeiGene. However, Zhejiang Xiantong RubberPlastic is 1.01 times less risky than BeiGene. It trades about 0.25 of its potential returns per unit of risk. BeiGene is currently generating about -0.02 per unit of risk. If you would invest  1,265  in Zhejiang Xiantong RubberPlastic on September 16, 2024 and sell it today you would earn a total of  196.00  from holding Zhejiang Xiantong RubberPlastic or generate 15.49% return on investment over 90 days.

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

Zhejiang Xiantong RubberPlasti  vs.  BeiGene

Zhejiang Xiantong

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Xiantong RubberPlastic are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang Xiantong sustained solid returns over the last few months and may actually be approaching a breakup point.

BeiGene

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 3 (%) 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.

Pair Trading with Zhejiang Xiantong and BeiGene

The main advantage of trading using opposite Zhejiang Xiantong and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Xiantong 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 Zhejiang Xiantong RubberPlastic 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.