Correlation Between PepsiCo and Gushen

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

By analyzing existing cross correlation between PepsiCo and Gushen Inc, you can compare the effects of market volatilities on PepsiCo and Gushen 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 Gushen. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Gushen.

Diversification Opportunities for PepsiCo and Gushen

0.0

Correlation Coefficient

PepsiCo  Gushen

Pay attention - limited upside

The 3 months correlation between PepsiCo and Gushen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Gushen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gushen Inc 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 Gushen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gushen Inc has no effect on the direction of PepsiCo i.e., PepsiCo and Gushen go up and down completely randomly.

Pair Corralation between PepsiCo and Gushen

Considering the 90-day investment horizon PepsiCo is expected to generate 0.66 times more return on investment than Gushen. However, PepsiCo is 1.51 times less risky than Gushen. It trades about -0.02 of its potential returns per unit of risk. Gushen Inc is currently generating about -0.02 per unit of risk. If you would invest  16,768  in PepsiCo on October 2, 2024 and sell it today you would lose (1,562) from holding PepsiCo or give up 9.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	25.0%
Values	Daily Returns

PepsiCo  vs.  Gushen Inc

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.

Gushen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gushen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Gushen is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PepsiCo and Gushen

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

The idea behind PepsiCo and Gushen 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.