Correlation Between PepsiCo and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both PepsiCo and Highway Holdings 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 Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Highway Holdings Limited, you can compare the effects of market volatilities on PepsiCo and Highway Holdings 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 Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Highway Holdings.
Diversification Opportunities for PepsiCo and Highway Holdings
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between PepsiCo and Highway is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings 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 Highway Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway Holdings has no effect on the direction of PepsiCo i.e., PepsiCo and Highway Holdings go up and down completely randomly.
Pair Corralation between PepsiCo and Highway Holdings
Considering the 90-day investment horizon PepsiCo is expected to under-perform the Highway Holdings. In addition to that, PepsiCo is 1.32 times more volatile than Highway Holdings Limited. It trades about -0.18 of its total potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.0 per unit of volatility. If you would invest 191.00 in Highway Holdings Limited on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Highway Holdings Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Highway Holdings Limited
Performance |
| Timeline |
| PepsiCo |
| Highway Holdings |
PepsiCo and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Highway Holdings
The main advantage of trading using opposite PepsiCo and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Highway Holdings 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 Highway Holdings will offset losses from the drop in Highway Holdings' long position.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
| Highway Holdings vs. Dave Warrants | Highway Holdings vs. Evolv Technologies Holdings | Highway Holdings vs. Aquagold International | Highway Holdings vs. Morningstar Unconstrained Allocation |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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