Correlation Between PepsiCo and U Power
Can any of the company-specific risk be diversified away by investing in both PepsiCo and U Power 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 U Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and U Power Limited, you can compare the effects of market volatilities on PepsiCo and U Power 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 U Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and U Power.
Diversification Opportunities for PepsiCo and U Power
Good diversification
The 3 months correlation between PepsiCo and UCAR is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and U Power Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Power 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 are associated (or correlated) with U Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Power Limited has no effect on the direction of PepsiCo i.e., PepsiCo and U Power go up and down completely randomly.
Pair Corralation between PepsiCo and U Power
Considering the 90-day investment horizon PepsiCo is expected to generate 0.26 times more return on investment than U Power. However, PepsiCo is 3.87 times less risky than U Power. It trades about -0.19 of its potential returns per unit of risk. U Power Limited is currently generating about -0.23 per unit of risk. If you would invest 16,984 in PepsiCo on August 27, 2024 and sell it today you would lose (784.00) from holding PepsiCo or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. U Power Limited
Performance |
| Timeline |
| PepsiCo |
| U Power Limited |
PepsiCo and U Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and U Power
The main advantage of trading using opposite PepsiCo and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, U Power 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 U Power will offset losses from the drop in U Power's long position.The idea behind PepsiCo and U Power 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.| U Power vs. Kaixin Auto Holdings | U Power vs. Uxin | U Power vs. SunCar Technology Group | U Power vs. Carvana Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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