Correlation Between Kimberly Clark and FibroGen

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

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

Diversification Opportunities for Kimberly Clark and FibroGen

0.3

Correlation Coefficient

Kimberly Clark  FibroGen

Weak diversification

The 3 months correlation between Kimberly and FibroGen is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark de Mxico and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen and Kimberly Clark 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 Kimberly Clark de Mxico 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 Kimberly Clark i.e., Kimberly Clark and FibroGen go up and down completely randomly.

Pair Corralation between Kimberly Clark and FibroGen

Assuming the 90 days trading horizon Kimberly Clark de Mxico is expected to under-perform the FibroGen. But the stock apears to be less risky and, when comparing its historical volatility, Kimberly Clark de Mxico is 5.53 times less risky than FibroGen. The stock trades about -0.06 of its potential returns per unit of risk. The FibroGen is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,908  in FibroGen on October 20, 2024 and sell it today you would lose (700.00) from holding FibroGen or give up 36.69% of portfolio value over 90 days.

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

Kimberly Clark de Mxico  vs.  FibroGen

Kimberly Clark de

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kimberly Clark de Mxico are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Kimberly Clark 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

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FibroGen are ranked lower than 14 (%) 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.

Pair Trading with Kimberly Clark and FibroGen

The main advantage of trading using opposite Kimberly Clark and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimberly Clark 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 Kimberly Clark de Mxico 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.