Correlation Between FibroGen and Schlumberger
Can any of the company-specific risk be diversified away by investing in both FibroGen and Schlumberger 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 FibroGen and Schlumberger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FibroGen and Schlumberger Limited, you can compare the effects of market volatilities on FibroGen and Schlumberger 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 FibroGen with a short position of Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of FibroGen and Schlumberger.
Diversification Opportunities for FibroGen and Schlumberger
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between FibroGen and Schlumberger is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding FibroGen and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited and FibroGen 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 FibroGen are associated (or correlated) with Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of FibroGen i.e., FibroGen and Schlumberger go up and down completely randomly.
Pair Corralation between FibroGen and Schlumberger
Assuming the 90 days trading horizon FibroGen is expected to generate 1.58 times more return on investment than Schlumberger. However, FibroGen is 1.58 times more volatile than Schlumberger Limited. It trades about 0.26 of its potential returns per unit of risk. Schlumberger Limited is currently generating about 0.21 per unit of risk. If you would invest 640.00 in FibroGen on September 2, 2024 and sell it today you would earn a total of 150.00 from holding FibroGen or generate 23.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FibroGen vs. Schlumberger Limited
Performance |
| Timeline |
| FibroGen |
| Schlumberger Limited |
FibroGen and Schlumberger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FibroGen and Schlumberger
The main advantage of trading using opposite FibroGen and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FibroGen position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.| FibroGen vs. Monster Beverage Corp | FibroGen vs. New Oriental Education | FibroGen vs. KB Home | FibroGen vs. Applied Materials |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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