Correlation Between Hesai Group and PepsiCo

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

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

Diversification Opportunities for Hesai Group and PepsiCo

0.03

Correlation Coefficient

Hesai Group  PepsiCo

Significant diversification

The 3 months correlation between Hesai and PepsiCo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hesai Group American and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Hesai Group 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 Hesai Group American 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 Hesai Group i.e., Hesai Group and PepsiCo go up and down completely randomly.

Pair Corralation between Hesai Group and PepsiCo

Given the investment horizon of 90 days Hesai Group American is expected to generate 6.32 times more return on investment than PepsiCo. However, Hesai Group is 6.32 times more volatile than PepsiCo. It trades about 0.07 of its potential returns per unit of risk. PepsiCo is currently generating about 0.0 per unit of risk. If you would invest  1,470  in Hesai Group American on December 28, 2024 and sell it today you would earn a total of  256.00  from holding Hesai Group American or generate 17.41% return on investment over 90 days.

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

Hesai Group American  vs.  PepsiCo

Hesai Group American

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hesai Group American are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Hesai Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

PepsiCo

Risk-Adjusted Performance

Very Weak

Over the last 90 days PepsiCo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, PepsiCo is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hesai Group and PepsiCo

The main advantage of trading using opposite Hesai Group and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hesai Group 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 Hesai Group American 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.