Correlation Between Yum China and Sonder Holdings
Can any of the company-specific risk be diversified away by investing in both Yum China and Sonder Holdings 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 China and Sonder Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum China Holdings and Sonder Holdings, you can compare the effects of market volatilities on Yum China and Sonder Holdings 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 China with a short position of Sonder Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum China and Sonder Holdings.
Diversification Opportunities for Yum China and Sonder Holdings
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yum and Sonder is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Yum China Holdings and Sonder Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonder Holdings and Yum China 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 China Holdings are associated (or correlated) with Sonder Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonder Holdings has no effect on the direction of Yum China i.e., Yum China and Sonder Holdings go up and down completely randomly.
Pair Corralation between Yum China and Sonder Holdings
Given the investment horizon of 90 days Yum China Holdings is expected to under-perform the Sonder Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Yum China Holdings is 24.27 times less risky than Sonder Holdings. The stock trades about 0.0 of its potential returns per unit of risk. The Sonder Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Sonder Holdings on September 3, 2024 and sell it today you would lose (13.01) from holding Sonder Holdings or give up 92.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.85% |
| Values | Daily Returns |
Yum China Holdings vs. Sonder Holdings
Performance |
| Timeline |
| Yum China Holdings |
| Sonder Holdings |
Yum China and Sonder Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum China and Sonder Holdings
The main advantage of trading using opposite Yum China and Sonder Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum China position performs unexpectedly, Sonder Holdings 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 Sonder Holdings will offset losses from the drop in Sonder Holdings' long position.| Yum China vs. Highway Holdings Limited | Yum China vs. QCR Holdings | Yum China vs. Partner Communications | Yum China vs. Acumen Pharmaceuticals |
| Sonder Holdings vs. Sonder Holdings | Sonder Holdings vs. Grab Holdings Limited | Sonder Holdings vs. Dave Warrants |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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