Correlation Between Pfizer and Dah Sing

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

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

Diversification Opportunities for Pfizer and Dah Sing

0.33

Correlation Coefficient

Pfizer  Dah Sing

Weak diversification

The 3 months correlation between Pfizer and Dah is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Dah Sing Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dah Sing Financial 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 Dah Sing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dah Sing Financial has no effect on the direction of Pfizer i.e., Pfizer and Dah Sing go up and down completely randomly.

Pair Corralation between Pfizer and Dah Sing

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Dah Sing. In addition to that, Pfizer is 2.91 times more volatile than Dah Sing Financial. It trades about -0.06 of its total potential returns per unit of risk. Dah Sing Financial is currently generating about 0.28 per unit of volatility. If you would invest  1,100  in Dah Sing Financial on December 5, 2024 and sell it today you would earn a total of  27.00  from holding Dah Sing Financial or generate 2.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Pfizer Inc  vs.  Dah Sing Financial

Pfizer Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Dah Sing Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dah Sing Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dah Sing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Dah Sing

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

The idea behind Pfizer Inc and Dah Sing Financial 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.