Correlation Between Pfizer and Edesa Holding

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Can any of the company-specific risk be diversified away by investing in both Pfizer and Edesa Holding 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 Edesa Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Edesa Holding SA, you can compare the effects of market volatilities on Pfizer and Edesa Holding 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 Edesa Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Edesa Holding.

Diversification Opportunities for Pfizer and Edesa Holding

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Pfizer and Edesa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Edesa Holding SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edesa Holding 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 Edesa Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edesa Holding SA has no effect on the direction of Pfizer i.e., Pfizer and Edesa Holding go up and down completely randomly.

Pair Corralation between Pfizer and Edesa Holding

Assuming the 90 days trading horizon Pfizer is expected to generate 6.63 times less return on investment than Edesa Holding. In addition to that, Pfizer is 1.77 times more volatile than Edesa Holding SA. It trades about 0.01 of its total potential returns per unit of risk. Edesa Holding SA is currently generating about 0.12 per unit of volatility. If you would invest  17,300  in Edesa Holding SA on August 26, 2024 and sell it today you would earn a total of  31,700  from holding Edesa Holding SA or generate 183.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.59%
ValuesDaily Returns

Pfizer Inc  vs.  Edesa Holding SA

 Performance 
       Timeline  
Pfizer Inc 

Risk-Adjusted Performance

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Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Edesa Holding SA 

Risk-Adjusted Performance

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Over the last 90 days Edesa Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Edesa Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pfizer and Edesa Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pfizer and Edesa Holding

The main advantage of trading using opposite Pfizer and Edesa Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Edesa Holding 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 Edesa Holding will offset losses from the drop in Edesa Holding's long position.
The idea behind Pfizer Inc and Edesa Holding 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.
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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