Correlation Between Pfizer and Matthews Korea

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

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

Diversification Opportunities for Pfizer and Matthews Korea

-0.87

Correlation Coefficient

Pfizer  Matthews Korea

Pay attention - limited upside

The 3 months correlation between Pfizer and Matthews is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Matthews Korea Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Korea 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 Matthews Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Korea has no effect on the direction of Pfizer i.e., Pfizer and Matthews Korea go up and down completely randomly.

Pair Corralation between Pfizer and Matthews Korea

If you would invest  428.00  in Matthews Korea Fund on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Matthews Korea Fund or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Pfizer Inc  vs.  Matthews Korea Fund

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Matthews Korea

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews Korea Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Matthews Korea is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pfizer and Matthews Korea

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

The idea behind Pfizer Inc and Matthews Korea Fund 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.