Correlation Between PepsiCo and Azure Holding

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

By analyzing existing cross correlation between PepsiCo and Azure Holding Group, you can compare the effects of market volatilities on PepsiCo and Azure Holding 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 Azure Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Azure Holding.

Diversification Opportunities for PepsiCo and Azure Holding

-0.39

Correlation Coefficient

PepsiCo  Azure Holding

Very good diversification

The 3 months correlation between PepsiCo and Azure is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Azure Holding Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azure Holding Group 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 Azure Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azure Holding Group has no effect on the direction of PepsiCo i.e., PepsiCo and Azure Holding go up and down completely randomly.

Pair Corralation between PepsiCo and Azure Holding

Considering the 90-day investment horizon PepsiCo is expected to under-perform the Azure Holding. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 81.1 times less risky than Azure Holding. The stock trades about -0.01 of its potential returns per unit of risk. The Azure Holding Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Azure Holding Group on September 4, 2024 and sell it today you would earn a total of  20.97  from holding Azure Holding Group or generate 69900.0% return on investment over 90 days.

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

PepsiCo  vs.  Azure Holding Group

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.

Azure Holding Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Azure Holding Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Azure Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PepsiCo and Azure Holding

The main advantage of trading using opposite PepsiCo and Azure Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, Azure Holding 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 Azure Holding will offset losses from the drop in Azure Holding's long position.

The idea behind PepsiCo and Azure Holding Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..