Correlation Between Keck Seng and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Keck Seng 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 Keck Seng and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keck Seng Investments and PepsiCo, you can compare the effects of market volatilities on Keck Seng 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 Keck Seng with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keck Seng and PepsiCo.
Diversification Opportunities for Keck Seng and PepsiCo
Modest diversification
The 3 months correlation between Keck and PepsiCo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Keck Seng Investments and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Keck Seng 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 Keck Seng Investments 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 Keck Seng i.e., Keck Seng and PepsiCo go up and down completely randomly.
Pair Corralation between Keck Seng and PepsiCo
Assuming the 90 days horizon Keck Seng Investments is expected to generate 4.49 times more return on investment than PepsiCo. However, Keck Seng is 4.49 times more volatile than PepsiCo. It trades about 0.03 of its potential returns per unit of risk. PepsiCo is currently generating about 0.01 per unit of risk. If you would invest 27.00 in Keck Seng Investments on January 26, 2024 and sell it today you would earn a total of 6.00 from holding Keck Seng Investments or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keck Seng Investments vs. PepsiCo
Performance |
| Timeline |
| Keck Seng Investments |
| PepsiCo |
Keck Seng and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keck Seng and PepsiCo
The main advantage of trading using opposite Keck Seng and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keck Seng 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.| Keck Seng vs. Marriott International | Keck Seng vs. Hilton Worldwide Holdings | Keck Seng vs. InterContinental Hotels Group | Keck Seng vs. Choice Hotels International |
| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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