Correlation Between FibroGen and Grupo Industrial

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

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

Diversification Opportunities for FibroGen and Grupo Industrial

-0.17

Correlation Coefficient

FibroGen  Grupo Industrial

Good diversification

The 3 months correlation between FibroGen and Grupo is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding FibroGen and Grupo Industrial Saltillo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Industrial Saltillo 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 Grupo Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Industrial Saltillo has no effect on the direction of FibroGen i.e., FibroGen and Grupo Industrial go up and down completely randomly.

Pair Corralation between FibroGen and Grupo Industrial

Assuming the 90 days trading horizon FibroGen is expected to generate 5.38 times more return on investment than Grupo Industrial. However, FibroGen is 5.38 times more volatile than Grupo Industrial Saltillo. It trades about 0.24 of its potential returns per unit of risk. Grupo Industrial Saltillo is currently generating about 0.01 per unit of risk. If you would invest  640.00  in FibroGen on October 6, 2024 and sell it today you would earn a total of  464.00  from holding FibroGen or generate 72.5% return on investment over 90 days.

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

FibroGen  vs.  Grupo Industrial Saltillo

FibroGen

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FibroGen are ranked lower than 10 (%) 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.

Grupo Industrial Saltillo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Industrial Saltillo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 FibroGen and Grupo Industrial

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

The idea behind FibroGen and Grupo Industrial Saltillo 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.