Correlation Between Pfizer and South Atlantic

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

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

Diversification Opportunities for Pfizer and South Atlantic

-0.87

Correlation Coefficient

Pfizer  South Atlantic

Pay attention - limited upside

The 3 months correlation between Pfizer and South is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and South Atlantic Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Atlantic Bancshares 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 South Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Atlantic Bancshares has no effect on the direction of Pfizer i.e., Pfizer and South Atlantic go up and down completely randomly.

Pair Corralation between Pfizer and South Atlantic

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.54 times more return on investment than South Atlantic. However, Pfizer Inc is 1.86 times less risky than South Atlantic. It trades about 0.12 of its potential returns per unit of risk. South Atlantic Bancshares is currently generating about -0.3 per unit of risk. If you would invest  2,486  in Pfizer Inc on September 17, 2024 and sell it today you would earn a total of  72.00  from holding Pfizer Inc or generate 2.9% return on investment over 90 days.

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

Pfizer Inc  vs.  South Atlantic Bancshares

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.

South Atlantic Bancshares

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in South Atlantic Bancshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, South Atlantic disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and South Atlantic

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

The idea behind Pfizer Inc and South Atlantic Bancshares 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.