Correlation Between FibroGen and Grupo Posadas

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

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

Diversification Opportunities for FibroGen and Grupo Posadas

-0.62

Correlation Coefficient

FibroGen  Grupo Posadas

Excellent diversification

The 3 months correlation between FibroGen and Grupo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding FibroGen and Grupo Posadas SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Posadas 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 Posadas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Posadas SAB has no effect on the direction of FibroGen i.e., FibroGen and Grupo Posadas go up and down completely randomly.

Pair Corralation between FibroGen and Grupo Posadas

Assuming the 90 days trading horizon FibroGen is expected to generate 9.94 times more return on investment than Grupo Posadas. However, FibroGen is 9.94 times more volatile than Grupo Posadas SAB. It trades about 0.27 of its potential returns per unit of risk. Grupo Posadas SAB is currently generating about -0.2 per unit of risk. If you would invest  804.00  in FibroGen on October 24, 2024 and sell it today you would earn a total of  404.00  from holding FibroGen or generate 50.25% return on investment over 90 days.

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

FibroGen  vs.  Grupo Posadas 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 Posadas SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Posadas SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with FibroGen and Grupo Posadas

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

The idea behind FibroGen and Grupo Posadas 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.