Correlation Between Yum Brands and China Southern
Can any of the company-specific risk be diversified away by investing in both Yum Brands and China Southern 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 China Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and China Southern Airlines, you can compare the effects of market volatilities on Yum Brands and China Southern 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 China Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and China Southern.
Diversification Opportunities for Yum Brands and China Southern
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yum and China is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines 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 China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of Yum Brands i.e., Yum Brands and China Southern go up and down completely randomly.
Pair Corralation between Yum Brands and China Southern
If you would invest 13,916 in Yum Brands on September 3, 2024 and sell it today you would lose (13.00) from holding Yum Brands or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.8% |
| Values | Daily Returns |
Yum Brands vs. China Southern Airlines
Performance |
| Timeline |
| Yum Brands |
| China Southern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Yum Brands and China Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and China Southern
The main advantage of trading using opposite Yum Brands and China Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands position performs unexpectedly, China Southern 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 China Southern will offset losses from the drop in China Southern's long position.| Yum Brands vs. Highway Holdings Limited | Yum Brands vs. QCR Holdings | Yum Brands vs. Partner Communications | Yum Brands vs. Acumen Pharmaceuticals |
| China Southern vs. Avis Budget Group | China Southern vs. China Aircraft Leasing | China Southern vs. Fast Retailing Co | China Southern vs. Vestis |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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