Correlation Between Pfizer and Perception Capital

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

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

Diversification Opportunities for Pfizer and Perception Capital

-0.64

Correlation Coefficient

Pfizer  Perception Capital

Excellent diversification

The 3 months correlation between Pfizer and Perception is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Perception Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perception Capital Corp 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 Perception Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perception Capital Corp has no effect on the direction of Pfizer i.e., Pfizer and Perception Capital go up and down completely randomly.

Pair Corralation between Pfizer and Perception Capital

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Perception Capital. In addition to that, Pfizer is 1.43 times more volatile than Perception Capital Corp. It trades about -0.07 of its total potential returns per unit of risk. Perception Capital Corp is currently generating about 0.05 per unit of volatility. If you would invest  1,053  in Perception Capital Corp on September 16, 2024 and sell it today you would earn a total of  68.00  from holding Perception Capital Corp or generate 6.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.83%
Values	Daily Returns

Pfizer Inc  vs.  Perception Capital Corp

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 uncertain 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.

Perception Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perception Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Perception Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pfizer and Perception Capital

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

The idea behind Pfizer Inc and Perception Capital Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.