Correlation Between Pfizer and Central Puerto
Can any of the company-specific risk be diversified away by investing in both Pfizer and Central Puerto 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 Central Puerto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Central Puerto SA, you can compare the effects of market volatilities on Pfizer and Central Puerto 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 Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Central Puerto.
Diversification Opportunities for Pfizer and Central Puerto
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pfizer and Central is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto 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 Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Pfizer i.e., Pfizer and Central Puerto go up and down completely randomly.
Pair Corralation between Pfizer and Central Puerto
Assuming the 90 days trading horizon Pfizer Inc is expected to under-perform the Central Puerto. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.34 times less risky than Central Puerto. The stock trades about -0.37 of its potential returns per unit of risk. The Central Puerto SA is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 130,500 in Central Puerto SA on August 26, 2024 and sell it today you would earn a total of 25,500 from holding Central Puerto SA or generate 19.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Central Puerto SA
Performance |
| Timeline |
| Pfizer Inc |
| Central Puerto SA |
Pfizer and Central Puerto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Central Puerto
The main advantage of trading using opposite Pfizer and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Central Puerto 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 Central Puerto will offset losses from the drop in Central Puerto's long position.The idea behind Pfizer Inc and Central Puerto 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.| Central Puerto vs. American Express Co | Central Puerto vs. United States Steel | Central Puerto vs. Capex SA | Central Puerto vs. Pfizer Inc |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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