Correlation Between FibroGen and Ameriprise Financial

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

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

Diversification Opportunities for FibroGen and Ameriprise Financial

-0.32

Correlation Coefficient

FibroGen  Ameriprise Financial

Very good diversification

The 3 months correlation between FibroGen and Ameriprise is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding FibroGen and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and FibroGen 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 FibroGen are associated (or correlated) with Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of FibroGen i.e., FibroGen and Ameriprise Financial go up and down completely randomly.

Pair Corralation between FibroGen and Ameriprise Financial

Assuming the 90 days trading horizon FibroGen is expected to generate 2.93 times less return on investment than Ameriprise Financial. In addition to that, FibroGen is 1.57 times more volatile than Ameriprise Financial. It trades about 0.03 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.15 per unit of volatility. If you would invest  871,972  in Ameriprise Financial on August 30, 2024 and sell it today you would earn a total of  286,181  from holding Ameriprise Financial or generate 32.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

FibroGen  vs.  Ameriprise Financial

FibroGen

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FibroGen are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, FibroGen may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Ameriprise Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Ameriprise Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FibroGen and Ameriprise Financial

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

The idea behind FibroGen and Ameriprise Financial 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.