Correlation Between Semler Scientific and PEPSICO

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

By analyzing existing cross correlation between Semler Scientific and PEPSICO INC 35, you can compare the effects of market volatilities on Semler Scientific 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 Semler Scientific with a short position of PEPSICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semler Scientific and PEPSICO.

Diversification Opportunities for Semler Scientific and PEPSICO

-0.32

Correlation Coefficient

Semler Scientific  PEPSICO

Very good diversification

The 3 months correlation between Semler and PEPSICO is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Semler Scientific and PEPSICO INC 35 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPSICO INC 35 and Semler Scientific 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 Semler Scientific 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 INC 35 has no effect on the direction of Semler Scientific i.e., Semler Scientific and PEPSICO go up and down completely randomly.

Pair Corralation between Semler Scientific and PEPSICO

Given the investment horizon of 90 days Semler Scientific is expected to generate 15.36 times more return on investment than PEPSICO. However, Semler Scientific is 15.36 times more volatile than PEPSICO INC 35. It trades about 0.1 of its potential returns per unit of risk. PEPSICO INC 35 is currently generating about -0.04 per unit of risk. If you would invest  3,452  in Semler Scientific on September 24, 2024 and sell it today you would earn a total of  2,726  from holding Semler Scientific or generate 78.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.55%
Values	Daily Returns

Semler Scientific  vs.  PEPSICO INC 35

Semler Scientific

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semler Scientific are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Semler Scientific reported solid returns over the last few months and may actually be approaching a breakup point.

PEPSICO INC 35

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEPSICO INC 35 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PEPSICO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Semler Scientific and PEPSICO

The main advantage of trading using opposite Semler Scientific and PEPSICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semler Scientific 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 Semler Scientific and PEPSICO INC 35 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.