Correlation Between PepsiCo and Gaztransport Technigaz

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

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

Diversification Opportunities for PepsiCo and Gaztransport Technigaz

-0.46

Correlation Coefficient

PepsiCo  Gaztransport Technigaz

Very good diversification

The 3 months correlation between PepsiCo and Gaztransport is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Gaztransport Technigaz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and PepsiCo 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 PepsiCo are associated (or correlated) with Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of PepsiCo i.e., PepsiCo and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between PepsiCo and Gaztransport Technigaz

Assuming the 90 days trading horizon PepsiCo is expected to under-perform the Gaztransport Technigaz. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 1.74 times less risky than Gaztransport Technigaz. The stock trades about -0.21 of its potential returns per unit of risk. The Gaztransport Technigaz SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  12,628  in Gaztransport Technigaz SA on October 12, 2024 and sell it today you would earn a total of  1,222  from holding Gaztransport Technigaz SA or generate 9.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

PepsiCo  vs.  Gaztransport Technigaz SA

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Gaztransport Technigaz

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Gaztransport Technigaz may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PepsiCo and Gaztransport Technigaz

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

The idea behind PepsiCo and Gaztransport Technigaz SA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.