Correlation Between Prudential Plc and FibroGen

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

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

Diversification Opportunities for Prudential Plc and FibroGen

0.4

Correlation Coefficient

Prudential Plc  FibroGen

Very weak diversification

The 3 months correlation between Prudential and FibroGen is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Prudential plc and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen and Prudential Plc 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 Prudential plc 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 Prudential Plc i.e., Prudential Plc and FibroGen go up and down completely randomly.

Pair Corralation between Prudential Plc and FibroGen

Assuming the 90 days trading horizon Prudential plc is expected to generate 0.0 times more return on investment than FibroGen. However, Prudential plc is 855.94 times less risky than FibroGen. It trades about -0.12 of its potential returns per unit of risk. FibroGen is currently generating about -0.07 per unit of risk. If you would invest  43,900  in Prudential plc on December 30, 2024 and sell it today you would lose (33.00) from holding Prudential plc or give up 0.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Prudential plc  vs.  FibroGen

Prudential plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Prudential Plc 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

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Prudential Plc and FibroGen

The main advantage of trading using opposite Prudential Plc and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Plc 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 Prudential plc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.