Correlation Between Zijin Mining and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Zijin Mining 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 Zijin Mining and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zijin Mining Group and PepsiCo, you can compare the effects of market volatilities on Zijin Mining 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 Zijin Mining with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and PepsiCo.
Diversification Opportunities for Zijin Mining and PepsiCo
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zijin and PepsiCo is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Zijin Mining 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 Zijin Mining Group 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 Zijin Mining i.e., Zijin Mining and PepsiCo go up and down completely randomly.
Pair Corralation between Zijin Mining and PepsiCo
Assuming the 90 days horizon Zijin Mining Group is expected to under-perform the PepsiCo. In addition to that, Zijin Mining is 5.51 times more volatile than PepsiCo. It trades about -0.09 of its total potential returns per unit of risk. PepsiCo is currently generating about -0.5 per unit of volatility. If you would invest 15,348 in PepsiCo on September 26, 2024 and sell it today you would lose (880.00) from holding PepsiCo or give up 5.73% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Zijin Mining Group vs. PepsiCo
Performance |
Timeline |
Zijin Mining Group |
PepsiCo |
Zijin Mining and PepsiCo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zijin Mining and PepsiCo
The main advantage of trading using opposite Zijin Mining and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining 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.Zijin Mining vs. BHP Group Limited | Zijin Mining vs. BHP Group Limited | Zijin Mining vs. Rio Tinto Group | Zijin Mining vs. Rio Tinto Group |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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