Correlation Between Ruths Hospitality and Yum China
Can any of the company-specific risk be diversified away by investing in both Ruths Hospitality 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 Ruths Hospitality and Yum China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruths Hospitality Group and Yum China Holdings, you can compare the effects of market volatilities on Ruths Hospitality 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 Ruths Hospitality with a short position of Yum China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruths Hospitality and Yum China.
Diversification Opportunities for Ruths Hospitality and Yum China
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ruths and Yum is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ruths Hospitality Group 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 Ruths Hospitality 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 Ruths Hospitality Group 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 Ruths Hospitality i.e., Ruths Hospitality and Yum China go up and down completely randomly.
Pair Corralation between Ruths Hospitality and Yum China
If you would invest 4,470 in Yum China Holdings on August 27, 2024 and sell it today you would earn a total of 288.00 from holding Yum China Holdings or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Ruths Hospitality Group vs. Yum China Holdings
Performance |
| Timeline |
| Ruths Hospitality |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Yum China Holdings |
Ruths Hospitality and Yum China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruths Hospitality and Yum China
The main advantage of trading using opposite Ruths Hospitality and Yum China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruths Hospitality 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.| Ruths Hospitality vs. Dine Brands Global | Ruths Hospitality vs. Bloomin Brands | Ruths Hospitality vs. BJs Restaurants | Ruths Hospitality vs. The Cheesecake Factory |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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