Correlation Between Schlumberger and FibroGen
Can any of the company-specific risk be diversified away by investing in both Schlumberger 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 Schlumberger and FibroGen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schlumberger Limited and FibroGen, you can compare the effects of market volatilities on Schlumberger 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 Schlumberger with a short position of FibroGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schlumberger and FibroGen.
Diversification Opportunities for Schlumberger and FibroGen
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Schlumberger and FibroGen is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Schlumberger Limited and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen and Schlumberger 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 Schlumberger 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 Schlumberger i.e., Schlumberger and FibroGen go up and down completely randomly.
Pair Corralation between Schlumberger and FibroGen
Assuming the 90 days trading horizon Schlumberger is expected to generate 1.91 times less return on investment than FibroGen. But when comparing it to its historical volatility, Schlumberger Limited is 1.58 times less risky than FibroGen. It trades about 0.21 of its potential returns per unit of risk. FibroGen is currently generating about 0.26 of returns per unit of risk over similar time horizon. 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 |
Schlumberger Limited vs. FibroGen
Performance |
| Timeline |
| Schlumberger Limited |
| FibroGen |
Schlumberger and FibroGen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schlumberger and FibroGen
The main advantage of trading using opposite Schlumberger and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schlumberger 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 Schlumberger 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.| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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