Correlation Between NOW and FibroGen

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

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

Diversification Opportunities for NOW and FibroGen

0.0

Correlation Coefficient

NOW  FibroGen

Pay attention - limited upside

The 3 months correlation between NOW and FibroGen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NOW Inc and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen and NOW 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 NOW Inc 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 NOW i.e., NOW and FibroGen go up and down completely randomly.

Pair Corralation between NOW and FibroGen

If you would invest  750.00  in FibroGen on October 5, 2024 and sell it today you would earn a total of  445.00  from holding FibroGen or generate 59.33% return on investment over 90 days.

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

NOW Inc  vs.  FibroGen

NOW Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOW Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, NOW is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FibroGen

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FibroGen are ranked lower than 11 (%) 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 NOW and FibroGen

The main advantage of trading using opposite NOW and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOW 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 NOW Inc 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.