Correlation Between PEPSICO and ACG Metals

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

By analyzing existing cross correlation between PEPSICO INC and ACG Metals Limited, you can compare the effects of market volatilities on PEPSICO and ACG Metals 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 ACG Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPSICO and ACG Metals.

Diversification Opportunities for PEPSICO and ACG Metals

0.0

Correlation Coefficient

PEPSICO  ACG Metals

Pay attention - limited upside

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

Pair Corralation between PEPSICO and ACG Metals

If you would invest  8,740  in PEPSICO INC on September 25, 2024 and sell it today you would lose (365.00) from holding PEPSICO INC or give up 4.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	60.16%
Values	Daily Returns

PEPSICO INC  vs.  ACG Metals Limited

PEPSICO INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PEPSICO INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PEPSICO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ACG Metals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACG Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ACG Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PEPSICO and ACG Metals

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

The idea behind PEPSICO INC and ACG Metals Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.