Correlation Between Value Grupo and FibroGen

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

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

Diversification Opportunities for Value Grupo and FibroGen

0.01

Correlation Coefficient

Value Grupo  FibroGen

Significant diversification

The 3 months correlation between Value and FibroGen is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Value Grupo Financiero and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen and Value Grupo 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 Value Grupo Financiero are associated (or correlated) with FibroGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibroGen has no effect on the direction of Value Grupo i.e., Value Grupo and FibroGen go up and down completely randomly.

Pair Corralation between Value Grupo and FibroGen

Assuming the 90 days trading horizon Value Grupo is expected to generate 91.0 times less return on investment than FibroGen. But when comparing it to its historical volatility, Value Grupo Financiero is 2.13 times less risky than FibroGen. It trades about 0.0 of its potential returns per unit of risk. FibroGen is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  750.00  in FibroGen on September 25, 2024 and sell it today you would earn a total of  269.00  from holding FibroGen or generate 35.87% return on investment over 90 days.

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

Value Grupo Financiero  vs.  FibroGen

Value Grupo Financiero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Value Grupo Financiero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Value Grupo is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

FibroGen

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FibroGen are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, FibroGen showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Value Grupo and FibroGen

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

The idea behind Value Grupo Financiero and FibroGen 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .