Correlation Between Uni President and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Uni President 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 Uni President and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uni President China Holdings and PepsiCo, you can compare the effects of market volatilities on Uni President 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 Uni President with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uni President and PepsiCo.
Diversification Opportunities for Uni President and PepsiCo
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Uni and PepsiCo is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Uni President China Holdings and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Uni President 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 Uni President China Holdings 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 has no effect on the direction of Uni President i.e., Uni President and PepsiCo go up and down completely randomly.
Pair Corralation between Uni President and PepsiCo
Assuming the 90 days horizon Uni President China Holdings is expected to generate 4.45 times more return on investment than PepsiCo. However, Uni President is 4.45 times more volatile than PepsiCo. It trades about 0.07 of its potential returns per unit of risk. PepsiCo is currently generating about -0.03 per unit of risk. If you would invest 67.00 in Uni President China Holdings on September 4, 2024 and sell it today you would earn a total of 11.00 from holding Uni President China Holdings or generate 16.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uni President China Holdings vs. PepsiCo
Performance |
| Timeline |
| Uni President China |
| PepsiCo |
Uni President and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uni President and PepsiCo
The main advantage of trading using opposite Uni President and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uni President 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.| Uni President vs. PepsiCo | Uni President vs. Monster Beverage Corp | Uni President vs. Coca Cola European Partners | Uni President vs. Coca Cola FEMSA SAB |
| PepsiCo vs. Fukuyama Transporting Co | PepsiCo vs. Transportadora de Gas | PepsiCo vs. Transport International Holdings | PepsiCo vs. GREENX METALS LTD |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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