Correlation Between Edesa Biotech and FibroGen
Can any of the company-specific risk be diversified away by investing in both Edesa Biotech 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 Edesa Biotech and FibroGen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edesa Biotech and FibroGen, you can compare the effects of market volatilities on Edesa Biotech 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 Edesa Biotech with a short position of FibroGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edesa Biotech and FibroGen.
Diversification Opportunities for Edesa Biotech and FibroGen
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Edesa and FibroGen is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Edesa Biotech and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen and Edesa Biotech 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 Edesa Biotech 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 Edesa Biotech i.e., Edesa Biotech and FibroGen go up and down completely randomly.
Pair Corralation between Edesa Biotech and FibroGen
Given the investment horizon of 90 days Edesa Biotech is expected to generate 1.08 times more return on investment than FibroGen. However, Edesa Biotech is 1.08 times more volatile than FibroGen. It trades about 0.03 of its potential returns per unit of risk. FibroGen is currently generating about -0.01 per unit of risk. If you would invest 191.00 in Edesa Biotech on November 2, 2024 and sell it today you would lose (2.00) from holding Edesa Biotech or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edesa Biotech vs. FibroGen
Performance |
| Timeline |
| Edesa Biotech |
| FibroGen |
Edesa Biotech and FibroGen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edesa Biotech and FibroGen
The main advantage of trading using opposite Edesa Biotech and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edesa Biotech 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.| Edesa Biotech vs. SAB Biotherapeutics | Edesa Biotech vs. Senti Biosciences | Edesa Biotech vs. Cingulate | Edesa Biotech vs. Indaptus Therapeutics |
| FibroGen vs. Ardelyx | FibroGen vs. Zura Bio Limited | FibroGen vs. Hepion Pharmaceuticals | FibroGen vs. Verastem |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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