Correlation Between Pfizer and ChitogenX

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

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

Diversification Opportunities for Pfizer and ChitogenX

0.67

Correlation Coefficient

Pfizer  ChitogenX

Poor diversification

The 3 months correlation between Pfizer and ChitogenX is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and ChitogenX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChitogenX 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 ChitogenX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChitogenX has no effect on the direction of Pfizer i.e., Pfizer and ChitogenX go up and down completely randomly.

Pair Corralation between Pfizer and ChitogenX

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.18 times more return on investment than ChitogenX. However, Pfizer Inc is 5.48 times less risky than ChitogenX. It trades about -0.08 of its potential returns per unit of risk. ChitogenX is currently generating about -0.21 per unit of risk. If you would invest  2,787  in Pfizer Inc on September 3, 2024 and sell it today you would lose (205.00) from holding Pfizer Inc or give up 7.36% of portfolio value over 90 days.

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

Pfizer Inc  vs.  ChitogenX

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 latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ChitogenX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChitogenX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pfizer and ChitogenX

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

The idea behind Pfizer Inc and ChitogenX 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.