Correlation Between Pfizer and Koil Energy

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

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

Diversification Opportunities for Pfizer and Koil Energy

-0.63

Correlation Coefficient

Pfizer  Koil Energy

Excellent diversification

The 3 months correlation between Pfizer and Koil is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Koil Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koil Energy Solutions 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 Koil Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koil Energy Solutions has no effect on the direction of Pfizer i.e., Pfizer and Koil Energy go up and down completely randomly.

Pair Corralation between Pfizer and Koil Energy

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Koil Energy. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 3.79 times less risky than Koil Energy. The stock trades about -0.12 of its potential returns per unit of risk. The Koil Energy Solutions is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  122.00  in Koil Energy Solutions on September 12, 2024 and sell it today you would earn a total of  76.00  from holding Koil Energy Solutions or generate 62.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Pfizer Inc  vs.  Koil Energy Solutions

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 weak 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.

Koil Energy Solutions

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Koil Energy Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Koil Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Koil Energy

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

The idea behind Pfizer Inc and Koil Energy Solutions 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.