Correlation Between Pfizer and PT Semen

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

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

Diversification Opportunities for Pfizer and PT Semen

0.61

Correlation Coefficient

Pfizer  PT Semen

Poor diversification

The 3 months correlation between Pfizer and PSGTF is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and PT Semen Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Semen Indonesia 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 PT Semen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Semen Indonesia has no effect on the direction of Pfizer i.e., Pfizer and PT Semen go up and down completely randomly.

Pair Corralation between Pfizer and PT Semen

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.32 times more return on investment than PT Semen. However, Pfizer Inc is 3.11 times less risky than PT Semen. It trades about -0.13 of its potential returns per unit of risk. PT Semen Indonesia is currently generating about -0.16 per unit of risk. If you would invest  2,882  in Pfizer Inc on September 13, 2024 and sell it today you would lose (345.00) from holding Pfizer Inc or give up 11.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Pfizer Inc  vs.  PT Semen Indonesia

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 latest abnormal performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

PT Semen Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Semen Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pfizer and PT Semen

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

The idea behind Pfizer Inc and PT Semen Indonesia 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.