Correlation Between Pfizer and Capex SA

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

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

Diversification Opportunities for Pfizer and Capex SA

-0.53

Correlation Coefficient

Pfizer  Capex SA

Excellent diversification

The 3 months correlation between Pfizer and Capex is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Capex SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capex SA and Pfizer 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 Pfizer Inc are associated (or correlated) with Capex SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capex SA has no effect on the direction of Pfizer i.e., Pfizer and Capex SA go up and down completely randomly.

Pair Corralation between Pfizer and Capex SA

Assuming the 90 days trading horizon Pfizer Inc is expected to under-perform the Capex SA. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.98 times less risky than Capex SA. The stock trades about -0.26 of its potential returns per unit of risk. The Capex SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  604,000  in Capex SA on September 3, 2024 and sell it today you would earn a total of  289,000  from holding Capex SA or generate 47.85% return on investment over 90 days.

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

Pfizer Inc  vs.  Capex SA

Pfizer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Capex SA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capex SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Capex SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Capex SA

The main advantage of trading using opposite Pfizer and Capex SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Capex SA 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 Capex SA will offset losses from the drop in Capex SA's long position.

The idea behind Pfizer Inc and Capex SA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.