Correlation Between BeiGene and Cansino Biologics

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

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

Diversification Opportunities for BeiGene and Cansino Biologics

0.67

Correlation Coefficient

BeiGene  Cansino Biologics

Poor diversification

The 3 months correlation between BeiGene and Cansino is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BeiGene and Cansino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cansino Biologics 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 Cansino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cansino Biologics has no effect on the direction of BeiGene i.e., BeiGene and Cansino Biologics go up and down completely randomly.

Pair Corralation between BeiGene and Cansino Biologics

Assuming the 90 days trading horizon BeiGene is expected to under-perform the Cansino Biologics. But the stock apears to be less risky and, when comparing its historical volatility, BeiGene is 1.16 times less risky than Cansino Biologics. The stock trades about -0.12 of its potential returns per unit of risk. The Cansino Biologics is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  6,946  in Cansino Biologics on September 13, 2024 and sell it today you would lose (292.00) from holding Cansino Biologics or give up 4.2% of portfolio value over 90 days.

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

BeiGene  vs.  Cansino Biologics

BeiGene

Risk-Adjusted Performance

4 of 100

Insignificant

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.

Cansino Biologics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cansino Biologics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cansino Biologics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BeiGene and Cansino Biologics

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

The idea behind BeiGene and Cansino Biologics 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.