Correlation Between Superior Plus and Yum China
Can any of the company-specific risk be diversified away by investing in both Superior Plus and Yum China 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 Superior Plus and Yum China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Yum China Holdings, you can compare the effects of market volatilities on Superior Plus and Yum China 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 Superior Plus with a short position of Yum China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Yum China.
Diversification Opportunities for Superior Plus and Yum China
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Superior and Yum is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Yum China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum China Holdings and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Yum China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum China Holdings has no effect on the direction of Superior Plus i.e., Superior Plus and Yum China go up and down completely randomly.
Pair Corralation between Superior Plus and Yum China
Assuming the 90 days horizon Superior Plus Corp is expected to generate 2.83 times more return on investment than Yum China. However, Superior Plus is 2.83 times more volatile than Yum China Holdings. It trades about 0.05 of its potential returns per unit of risk. Yum China Holdings is currently generating about 0.02 per unit of risk. If you would invest 428.00 in Superior Plus Corp on September 5, 2024 and sell it today you would earn a total of 12.00 from holding Superior Plus Corp or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Superior Plus Corp vs. Yum China Holdings
Performance |
| Timeline |
| Superior Plus Corp |
| Yum China Holdings |
Superior Plus and Yum China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Yum China
The main advantage of trading using opposite Superior Plus and Yum China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Yum China 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 Yum China will offset losses from the drop in Yum China's long position.| Superior Plus vs. Mobilezone Holding AG | Superior Plus vs. Citic Telecom International | Superior Plus vs. Tower One Wireless | Superior Plus vs. Ribbon Communications |
| Yum China vs. McDonalds | Yum China vs. Chipotle Mexican Grill | Yum China vs. Superior Plus Corp | Yum China vs. NMI Holdings |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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