Correlation Between Pfizer and Cresud SA

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

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

Diversification Opportunities for Pfizer and Cresud SA

-0.7

Correlation Coefficient

Pfizer  Cresud SA

Excellent diversification

The 3 months correlation between Pfizer and Cresud is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Cresud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud 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 Cresud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud SA has no effect on the direction of Pfizer i.e., Pfizer and Cresud SA go up and down completely randomly.

Pair Corralation between Pfizer and Cresud SA

Assuming the 90 days trading horizon Pfizer Inc is expected to generate 0.77 times more return on investment than Cresud SA. However, Pfizer Inc is 1.31 times less risky than Cresud SA. It trades about 0.32 of its potential returns per unit of risk. Cresud SA is currently generating about 0.21 per unit of risk. If you would invest  698,000  in Pfizer Inc on October 5, 2024 and sell it today you would earn a total of  89,000  from holding Pfizer Inc or generate 12.75% 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.  Cresud SA

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. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Cresud SA

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cresud SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cresud SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Cresud SA

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

The idea behind Pfizer Inc and Cresud 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 Global Correlations module to find global opportunities by holding instruments from different markets.