Correlation Between United States and FibroGen

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

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

Diversification Opportunities for United States and FibroGen

-0.21

Correlation Coefficient

United States  FibroGen

Very good diversification

The 3 months correlation between United and FibroGen is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen and United States 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 United States Steel 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 United States i.e., United States and FibroGen go up and down completely randomly.

Pair Corralation between United States and FibroGen

Given the investment horizon of 90 days United States Steel is expected to generate 0.62 times more return on investment than FibroGen. However, United States Steel is 1.6 times less risky than FibroGen. It trades about 0.02 of its potential returns per unit of risk. FibroGen is currently generating about -0.03 per unit of risk. If you would invest  69,842  in United States Steel on September 13, 2024 and sell it today you would earn a total of  29.00  from holding United States Steel or generate 0.04% return on investment over 90 days.

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

United States Steel  vs.  FibroGen

United States Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, United States 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 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 United States and FibroGen

The main advantage of trading using opposite United States and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.