Correlation Between Yum Brands and DigiAsia Corp
Can any of the company-specific risk be diversified away by investing in both Yum Brands and DigiAsia Corp 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 Yum Brands and DigiAsia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and DigiAsia Corp, you can compare the effects of market volatilities on Yum Brands and DigiAsia Corp 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 Yum Brands with a short position of DigiAsia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and DigiAsia Corp.
Diversification Opportunities for Yum Brands and DigiAsia Corp
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yum and DigiAsia is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and DigiAsia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiAsia Corp and Yum Brands 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 Yum Brands are associated (or correlated) with DigiAsia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiAsia Corp has no effect on the direction of Yum Brands i.e., Yum Brands and DigiAsia Corp go up and down completely randomly.
Pair Corralation between Yum Brands and DigiAsia Corp
Considering the 90-day investment horizon Yum Brands is expected to generate 30.09 times less return on investment than DigiAsia Corp. But when comparing it to its historical volatility, Yum Brands is 24.82 times less risky than DigiAsia Corp. It trades about 0.07 of its potential returns per unit of risk. DigiAsia Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9.56 in DigiAsia Corp on September 3, 2024 and sell it today you would lose (2.06) from holding DigiAsia Corp or give up 21.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.69% |
| Values | Daily Returns |
Yum Brands vs. DigiAsia Corp
Performance |
| Timeline |
| Yum Brands |
| DigiAsia Corp |
Yum Brands and DigiAsia Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and DigiAsia Corp
The main advantage of trading using opposite Yum Brands and DigiAsia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, DigiAsia Corp 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 DigiAsia Corp will offset losses from the drop in DigiAsia Corp's long position.| Yum Brands vs. Highway Holdings Limited | Yum Brands vs. QCR Holdings | Yum Brands vs. Partner Communications | Yum Brands vs. Acumen Pharmaceuticals |
| DigiAsia Corp vs. Newpark Resources | DigiAsia Corp vs. SunOpta | DigiAsia Corp vs. Meiwu Technology Co | DigiAsia Corp vs. GMS Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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