Correlation Between Black Diamond and BeiGene

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

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

Diversification Opportunities for Black Diamond and BeiGene

-0.72

Correlation Coefficient

Black Diamond  BeiGene

Pay attention - limited upside

The 3 months correlation between Black and BeiGene is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Black Diamond Therapeutics and BeiGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeiGene and Black Diamond 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 Black Diamond 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 Black Diamond i.e., Black Diamond and BeiGene go up and down completely randomly.

Pair Corralation between Black Diamond and BeiGene

Given the investment horizon of 90 days Black Diamond Therapeutics is expected to under-perform the BeiGene. In addition to that, Black Diamond is 2.08 times more volatile than BeiGene. It trades about -0.14 of its total potential returns per unit of risk. BeiGene is currently generating about 0.2 per unit of volatility. If you would invest  16,093  in BeiGene on July 22, 2024 and sell it today you would earn a total of  5,804  from holding BeiGene or generate 36.07% return on investment over 90 days.

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

Black Diamond Therapeutics  vs.  BeiGene

Black Diamond Therap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Diamond Therapeutics 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 fairly strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

BeiGene

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BeiGene are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BeiGene exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Black Diamond and BeiGene

The main advantage of trading using opposite Black Diamond and BeiGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Diamond 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 Black Diamond 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.