Correlation Between Pfizer and Origin Agritech

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Can any of the company-specific risk be diversified away by investing in both Pfizer and Origin Agritech 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 Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Origin Agritech, you can compare the effects of market volatilities on Pfizer and Origin Agritech 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 Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Origin Agritech.

Diversification Opportunities for Pfizer and Origin Agritech

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between Pfizer and Origin is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech 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 Origin Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Agritech has no effect on the direction of Pfizer i.e., Pfizer and Origin Agritech go up and down completely randomly.

Pair Corralation between Pfizer and Origin Agritech

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Origin Agritech. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 2.57 times less risky than Origin Agritech. The stock trades about -0.12 of its potential returns per unit of risk. The Origin Agritech is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  921.00  in Origin Agritech on May 21, 2022 and sell it today you would earn a total of  106.00  from holding Origin Agritech or generate 11.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pfizer Inc  vs.  Origin Agritech

 Performance (%) 
       Timeline  
Pfizer Inc 
Pfizer Performance
0 of 100
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 inconsistent 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.

Pfizer Price Channel

Origin Agritech 
Origin Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Origin Agritech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Origin Agritech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Origin Price Channel

Pfizer and Origin Agritech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pfizer and Origin Agritech

The main advantage of trading using opposite Pfizer and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Origin Agritech 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 Origin Agritech will offset losses from the drop in Origin Agritech's long position.
The idea behind Pfizer Inc and Origin Agritech 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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