Correlation Between Comba Telecom and Yum China
Can any of the company-specific risk be diversified away by investing in both Comba Telecom 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 Comba Telecom and Yum China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comba Telecom Systems and Yum China Holdings, you can compare the effects of market volatilities on Comba Telecom 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 Comba Telecom with a short position of Yum China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comba Telecom and Yum China.
Diversification Opportunities for Comba Telecom and Yum China
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Comba and Yum is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Comba Telecom Systems 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 Comba Telecom 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 Comba Telecom Systems 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 Comba Telecom i.e., Comba Telecom and Yum China go up and down completely randomly.
Pair Corralation between Comba Telecom and Yum China
Assuming the 90 days trading horizon Comba Telecom Systems is expected to generate 2.24 times more return on investment than Yum China. However, Comba Telecom is 2.24 times more volatile than Yum China Holdings. It trades about 0.07 of its potential returns per unit of risk. Yum China Holdings is currently generating about 0.04 per unit of risk. If you would invest 9.80 in Comba Telecom Systems on December 11, 2024 and sell it today you would earn a total of 10.20 from holding Comba Telecom Systems or generate 104.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comba Telecom Systems vs. Yum China Holdings
Performance |
| Timeline |
| Comba Telecom Systems |
| Yum China Holdings |
Comba Telecom and Yum China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comba Telecom and Yum China
The main advantage of trading using opposite Comba Telecom and Yum China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comba Telecom 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.| Comba Telecom vs. MEDCAW INVESTMENTS LS 01 | ||
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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