Correlation Between FibroGen and Schlumberger

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

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

Diversification Opportunities for FibroGen and Schlumberger

-0.27

Correlation Coefficient

FibroGen  Schlumberger

Very good diversification

The 3 months correlation between FibroGen and Schlumberger is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding FibroGen and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of FibroGen i.e., FibroGen and Schlumberger go up and down completely randomly.

Pair Corralation between FibroGen and Schlumberger

Assuming the 90 days trading horizon FibroGen is expected to under-perform the Schlumberger. In addition to that, FibroGen is 4.38 times more volatile than Schlumberger Limited. It trades about -0.02 of its total potential returns per unit of risk. Schlumberger Limited is currently generating about -0.02 per unit of volatility. If you would invest  101,917  in Schlumberger Limited on October 5, 2024 and sell it today you would lose (22,877) from holding Schlumberger Limited or give up 22.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

FibroGen  vs.  Schlumberger Limited

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.

Schlumberger Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schlumberger Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of 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 Schlumberger

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

The idea behind FibroGen and Schlumberger Limited 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.