Correlation Between Hurco Companies and PepsiCo

Can any of the company-specific risk be diversified away by investing in both Hurco Companies 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 Hurco Companies and PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hurco Companies and PepsiCo, you can compare the effects of market volatilities on Hurco Companies 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 Hurco Companies with a short position of PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hurco Companies and PepsiCo.

Diversification Opportunities for Hurco Companies and PepsiCo

-0.57

Correlation Coefficient

Hurco Companies  PepsiCo

Excellent diversification

The 3 months correlation between Hurco and PepsiCo is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hurco Companies and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo and Hurco Companies 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 Hurco Companies 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 Hurco Companies i.e., Hurco Companies and PepsiCo go up and down completely randomly.

Pair Corralation between Hurco Companies and PepsiCo

Given the investment horizon of 90 days Hurco Companies is expected to generate 3.06 times more return on investment than PepsiCo. However, Hurco Companies is 3.06 times more volatile than PepsiCo. It trades about 0.05 of its potential returns per unit of risk. PepsiCo is currently generating about -0.17 per unit of risk. If you would invest  1,850  in Hurco Companies on September 14, 2024 and sell it today you would earn a total of  112.00  from holding Hurco Companies or generate 6.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hurco Companies  vs.  PepsiCo

Hurco Companies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hurco Companies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Hurco Companies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PepsiCo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PepsiCo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Hurco Companies and PepsiCo

The main advantage of trading using opposite Hurco Companies and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hurco Companies 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.

The idea behind Hurco Companies and PepsiCo 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.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.