Correlation Between NOV and FibroGen

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Can any of the company-specific risk be diversified away by investing in both NOV 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 NOV and FibroGen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOV Inc and FibroGen, you can compare the effects of market volatilities on NOV 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 NOV with a short position of FibroGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOV and FibroGen.

Diversification Opportunities for NOV and FibroGen

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between NOV and FibroGen is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding NOV Inc and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen and NOV 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 NOV Inc 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 NOV i.e., NOV and FibroGen go up and down completely randomly.

Pair Corralation between NOV and FibroGen

Assuming the 90 days trading horizon NOV is expected to generate 124.48 times less return on investment than FibroGen. But when comparing it to its historical volatility, NOV Inc is 107.63 times less risky than FibroGen. It trades about 0.13 of its potential returns per unit of risk. FibroGen is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  750.00  in FibroGen on October 5, 2024 and sell it today you would earn a total of  445.00  from holding FibroGen or generate 59.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

NOV Inc  vs.  FibroGen

 Performance 
       Timeline  
NOV Inc 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NOV Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, NOV 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

11 of 100

 
Weak
 
Strong
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.

NOV and FibroGen Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NOV and FibroGen

The main advantage of trading using opposite NOV and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOV 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 NOV Inc 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.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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