Correlation Between Zura Bio and FibroGen

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

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

Diversification Opportunities for Zura Bio and FibroGen

-0.37

Correlation Coefficient

Zura Bio  FibroGen

Very good diversification

The 3 months correlation between Zura and FibroGen is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Zura Bio Limited and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen and Zura Bio 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 Zura Bio Limited 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 Zura Bio i.e., Zura Bio and FibroGen go up and down completely randomly.

Pair Corralation between Zura Bio and FibroGen

Given the investment horizon of 90 days Zura Bio Limited is expected to under-perform the FibroGen. But the stock apears to be less risky and, when comparing its historical volatility, Zura Bio Limited is 1.38 times less risky than FibroGen. The stock trades about -0.14 of its potential returns per unit of risk. The FibroGen is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  43.00  in FibroGen on December 4, 2024 and sell it today you would lose (5.00) from holding FibroGen or give up 11.63% of portfolio value over 90 days.

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

Zura Bio Limited  vs.  FibroGen

Zura Bio Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zura Bio Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat 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.

FibroGen

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FibroGen are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, FibroGen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zura Bio and FibroGen

The main advantage of trading using opposite Zura Bio and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zura Bio 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 Zura Bio Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.