Correlation Between Elmos Semiconductor and PepsiCo

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

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

Diversification Opportunities for Elmos Semiconductor and PepsiCo

0.0

Correlation Coefficient

Elmos Semiconductor  PepsiCo

Pay attention - limited upside

The 3 months correlation between Elmos and PepsiCo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Elmos Semiconductor 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 Elmos Semiconductor SE 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 has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and PepsiCo go up and down completely randomly.

Pair Corralation between Elmos Semiconductor and PepsiCo

Assuming the 90 days horizon Elmos Semiconductor SE is expected to generate 6.83 times more return on investment than PepsiCo. However, Elmos Semiconductor is 6.83 times more volatile than PepsiCo. It trades about 0.05 of its potential returns per unit of risk. PepsiCo is currently generating about -0.01 per unit of risk. If you would invest  2,624  in Elmos Semiconductor SE on October 4, 2024 and sell it today you would earn a total of  6,299  from holding Elmos Semiconductor SE or generate 240.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Elmos Semiconductor SE  vs.  PepsiCo

Elmos Semiconductor

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Elmos Semiconductor SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Elmos Semiconductor is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

PepsiCo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PepsiCo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Elmos Semiconductor and PepsiCo

The main advantage of trading using opposite Elmos Semiconductor and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elmos Semiconductor 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 Elmos Semiconductor SE and PepsiCo 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.