Correlation Between PEPSICO and Nok Airlines

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

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

Diversification Opportunities for PEPSICO and Nok Airlines

0.0

Correlation Coefficient

PEPSICO  Nok Airlines

Pay attention - limited upside

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

Pair Corralation between PEPSICO and Nok Airlines

If you would invest  7,848  in PEPSICO INC on September 25, 2024 and sell it today you would earn a total of  4,879  from holding PEPSICO INC or generate 62.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	45.0%
Values	Daily Returns

PEPSICO INC  vs.  Nok Airlines Public

PEPSICO INC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PEPSICO INC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, PEPSICO sustained solid returns over the last few months and may actually be approaching a breakup point.

Nok Airlines Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nok Airlines Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Nok Airlines is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PEPSICO and Nok Airlines

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

The idea behind PEPSICO INC and Nok Airlines Public 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.