Correlation Between Pfizer and Semler Scientific

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

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

Diversification Opportunities for Pfizer and Semler Scientific

-0.86

Correlation Coefficient

Pfizer  Semler Scientific

Pay attention - limited upside

The 3 months correlation between Pfizer and Semler is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Semler Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semler Scientific 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 Semler Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semler Scientific has no effect on the direction of Pfizer i.e., Pfizer and Semler Scientific go up and down completely randomly.

Pair Corralation between Pfizer and Semler Scientific

Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.21 times more return on investment than Semler Scientific. However, Pfizer Inc is 4.78 times less risky than Semler Scientific. It trades about 0.12 of its potential returns per unit of risk. Semler Scientific is currently generating about -0.06 per unit of risk. If you would invest  2,556  in Pfizer Inc on October 4, 2024 and sell it today you would earn a total of  97.00  from holding Pfizer Inc or generate 3.79% 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.  Semler Scientific

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 rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Semler Scientific

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semler Scientific are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Semler Scientific reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Semler Scientific

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

The idea behind Pfizer Inc and Semler Scientific 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 Transaction History module to view history of all your transactions and understand their impact on performance.