Correlation Between FibroGen and Grupo Lamosa

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

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

Diversification Opportunities for FibroGen and Grupo Lamosa

-0.57

Correlation Coefficient

FibroGen  Grupo Lamosa

Excellent diversification

The 3 months correlation between FibroGen and Grupo is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding FibroGen and Grupo Lamosa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Lamosa SAB 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 Lamosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Lamosa SAB has no effect on the direction of FibroGen i.e., FibroGen and Grupo Lamosa go up and down completely randomly.

Pair Corralation between FibroGen and Grupo Lamosa

Assuming the 90 days trading horizon FibroGen is expected to generate 17.35 times more return on investment than Grupo Lamosa. However, FibroGen is 17.35 times more volatile than Grupo Lamosa SAB. It trades about 0.03 of its potential returns per unit of risk. Grupo Lamosa SAB is currently generating about -0.04 per unit of risk. If you would invest  1,508  in FibroGen on October 5, 2024 and sell it today you would lose (313.00) from holding FibroGen or give up 20.76% of portfolio value over 90 days.

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

FibroGen  vs.  Grupo Lamosa SAB

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.

Grupo Lamosa SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Lamosa SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Grupo Lamosa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FibroGen and Grupo Lamosa

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

The idea behind FibroGen and Grupo Lamosa SAB 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..