Correlation Between Fevertree Drinks and Yum China
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Yum China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks PLC and Yum China Holdings, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Yum China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Yum China.
Diversification Opportunities for Fevertree Drinks and Yum China
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fevertree and Yum is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC 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 Fevertree Drinks 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 Fevertree Drinks PLC 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 Fevertree Drinks i.e., Fevertree Drinks and Yum China go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Yum China
Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to generate 1.5 times more return on investment than Yum China. However, Fevertree Drinks is 1.5 times more volatile than Yum China Holdings. It trades about 0.01 of its potential returns per unit of risk. Yum China Holdings is currently generating about 0.01 per unit of risk. If you would invest 855.00 in Fevertree Drinks PLC on December 12, 2024 and sell it today you would earn a total of 0.00 from holding Fevertree Drinks PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks PLC vs. Yum China Holdings
Performance |
| Timeline |
| Fevertree Drinks PLC |
| Yum China Holdings |
Fevertree Drinks and Yum China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Yum China
The main advantage of trading using opposite Fevertree Drinks and Yum China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. tokentus investment AG | ||
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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