Correlation Between Mingteng International and PepsiCo

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

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

Diversification Opportunities for Mingteng International and PepsiCo

-0.06

Correlation Coefficient

Mingteng International  PepsiCo

Good diversification

The 3 months correlation between Mingteng and PepsiCo is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Mingteng International and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Mingteng International 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 Mingteng International 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 Mingteng International i.e., Mingteng International and PepsiCo go up and down completely randomly.

Pair Corralation between Mingteng International and PepsiCo

Given the investment horizon of 90 days Mingteng International is expected to generate 5.22 times more return on investment than PepsiCo. However, Mingteng International is 5.22 times more volatile than PepsiCo. It trades about 0.02 of its potential returns per unit of risk. PepsiCo is currently generating about 0.0 per unit of risk. If you would invest  625.00  in Mingteng International on December 29, 2024 and sell it today you would lose (56.00) from holding Mingteng International or give up 8.96% of portfolio value over 90 days.

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

Mingteng International  vs.  PepsiCo

Mingteng International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mingteng International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Mingteng International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Mingteng International and PepsiCo

The main advantage of trading using opposite Mingteng International and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mingteng International 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 Mingteng International 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.