Correlation Between Pfizer and Relief Therapeutics

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

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

Diversification Opportunities for Pfizer and Relief Therapeutics

-0.38

Correlation Coefficient

Pfizer  Relief Therapeutics

Very good diversification

The 3 months correlation between Pfizer and Relief is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Relief Therapeutics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relief Therapeutics 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 Relief Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relief Therapeutics has no effect on the direction of Pfizer i.e., Pfizer and Relief Therapeutics go up and down completely randomly.

Pair Corralation between Pfizer and Relief Therapeutics

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.31 times more return on investment than Relief Therapeutics. However, Pfizer Inc is 3.23 times less risky than Relief Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Relief Therapeutics Holding is currently generating about -0.08 per unit of risk. If you would invest  2,514  in Pfizer Inc on December 3, 2024 and sell it today you would earn a total of  129.00  from holding Pfizer Inc or generate 5.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pfizer Inc  vs.  Relief Therapeutics Holding

Pfizer Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 5 (%) 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.

Relief Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Relief Therapeutics Holding 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pfizer and Relief Therapeutics

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

The idea behind Pfizer Inc and Relief Therapeutics Holding 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.