Correlation Between Amkor Technology and PEPSICO

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

By analyzing existing cross correlation between Amkor Technology and PEPSICO INC, you can compare the effects of market volatilities on Amkor Technology and PEPSICO 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 Amkor Technology with a short position of PEPSICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amkor Technology and PEPSICO.

Diversification Opportunities for Amkor Technology and PEPSICO

-0.07

Correlation Coefficient

Amkor Technology  PEPSICO

Good diversification

The 3 months correlation between Amkor and PEPSICO is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Amkor Technology and PEPSICO INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPSICO INC and Amkor Technology 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 Amkor Technology are associated (or correlated) with PEPSICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPSICO INC has no effect on the direction of Amkor Technology i.e., Amkor Technology and PEPSICO go up and down completely randomly.

Pair Corralation between Amkor Technology and PEPSICO

Given the investment horizon of 90 days Amkor Technology is expected to generate 83.92 times less return on investment than PEPSICO. But when comparing it to its historical volatility, Amkor Technology is 24.28 times less risky than PEPSICO. It trades about 0.02 of its potential returns per unit of risk. PEPSICO INC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,105  in PEPSICO INC on September 26, 2024 and sell it today you would earn a total of  3,622  from holding PEPSICO INC or generate 39.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	43.55%
Values	Daily Returns

Amkor Technology  vs.  PEPSICO INC

Amkor Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amkor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

PEPSICO INC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PEPSICO INC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, PEPSICO sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amkor Technology and PEPSICO

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

The idea behind Amkor Technology and PEPSICO INC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.