Correlation Between Pfizer and ALEFARM BREWING

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

By analyzing existing cross correlation between Pfizer Inc and ALEFARM BREWING DK 05, you can compare the effects of market volatilities on Pfizer and ALEFARM BREWING 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 ALEFARM BREWING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and ALEFARM BREWING.

Diversification Opportunities for Pfizer and ALEFARM BREWING

0.47

Correlation Coefficient

Pfizer  ALEFARM BREWING

Very weak diversification

The 3 months correlation between Pfizer and ALEFARM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and ALEFARM BREWING DK 05 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALEFARM BREWING DK 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 ALEFARM BREWING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALEFARM BREWING DK has no effect on the direction of Pfizer i.e., Pfizer and ALEFARM BREWING go up and down completely randomly.

Pair Corralation between Pfizer and ALEFARM BREWING

Assuming the 90 days trading horizon Pfizer Inc is expected to generate 0.32 times more return on investment than ALEFARM BREWING. However, Pfizer Inc is 3.09 times less risky than ALEFARM BREWING. It trades about -0.03 of its potential returns per unit of risk. ALEFARM BREWING DK 05 is currently generating about -0.03 per unit of risk. If you would invest  2,589  in Pfizer Inc on September 21, 2024 and sell it today you would lose (104.00) from holding Pfizer Inc or give up 4.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Pfizer Inc  vs.  ALEFARM BREWING DK 05

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. In spite of comparatively stable technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ALEFARM BREWING DK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALEFARM BREWING DK 05 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Pfizer and ALEFARM BREWING

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

The idea behind Pfizer Inc and ALEFARM BREWING DK 05 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.