Correlation Between BeiGene and CSL

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

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

Diversification Opportunities for BeiGene and CSL

0.09

Correlation Coefficient

BeiGene  CSL

Significant diversification

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

Pair Corralation between BeiGene and CSL

Given the investment horizon of 90 days BeiGene is expected to under-perform the CSL. In addition to that, BeiGene is 2.79 times more volatile than CSL. It trades about -0.07 of its total potential returns per unit of risk. CSL is currently generating about -0.11 per unit of volatility. If you would invest  9,513  in CSL on January 20, 2024 and sell it today you would lose (821.00) from holding CSL or give up 8.63% of portfolio value over 90 days.

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

BeiGene  vs.  CSL

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CSL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with BeiGene and CSL

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

The idea behind BeiGene and CSL 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..