Correlation Between Grupo Herdez and FibroGen

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

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

Diversification Opportunities for Grupo Herdez and FibroGen

-0.12

Correlation Coefficient

Grupo Herdez  FibroGen

Good diversification

The 3 months correlation between Grupo and FibroGen is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Herdez SAB and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen and Grupo Herdez 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 Grupo Herdez SAB 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 Grupo Herdez i.e., Grupo Herdez and FibroGen go up and down completely randomly.

Pair Corralation between Grupo Herdez and FibroGen

Assuming the 90 days trading horizon Grupo Herdez SAB is expected to generate 0.53 times more return on investment than FibroGen. However, Grupo Herdez SAB is 1.89 times less risky than FibroGen. It trades about 0.08 of its potential returns per unit of risk. FibroGen is currently generating about -0.08 per unit of risk. If you would invest  5,055  in Grupo Herdez SAB on September 24, 2024 and sell it today you would earn a total of  169.00  from holding Grupo Herdez SAB or generate 3.34% return on investment over 90 days.

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

Grupo Herdez SAB  vs.  FibroGen

Grupo Herdez SAB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Herdez SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Grupo Herdez 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

0 of 100

Very Weak

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

Pair Trading with Grupo Herdez and FibroGen

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

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.