Correlation Between Yum China and Bagger Daves

Can any of the company-specific risk be diversified away by investing in both Yum China and Bagger Daves 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 Bagger Daves 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 Bagger Daves Burger, you can compare the effects of market volatilities on Yum China and Bagger Daves 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 Bagger Daves. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum China and Bagger Daves.

Diversification Opportunities for Yum China and Bagger Daves

0.66

Correlation Coefficient

Yum China  Bagger Daves

Poor diversification

The 3 months correlation between Yum and Bagger is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Yum China Holdings and Bagger Daves Burger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bagger Daves Burger 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 Bagger Daves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bagger Daves Burger has no effect on the direction of Yum China i.e., Yum China and Bagger Daves go up and down completely randomly.

Pair Corralation between Yum China and Bagger Daves

Given the investment horizon of 90 days Yum China Holdings is expected to generate 0.37 times more return on investment than Bagger Daves. However, Yum China Holdings is 2.67 times less risky than Bagger Daves. It trades about -0.04 of its potential returns per unit of risk. Bagger Daves Burger is currently generating about -0.07 per unit of risk. If you would invest  4,907  in Yum China Holdings on February 17, 2025 and sell it today you would lose (486.00) from holding Yum China Holdings or give up 9.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.97%
Values	Daily Returns

Yum China Holdings  vs.  Bagger Daves Burger

Yum China Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yum China Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Bagger Daves Burger

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bagger Daves Burger has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Yum China and Bagger Daves

The main advantage of trading using opposite Yum China and Bagger Daves positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum China position performs unexpectedly, Bagger Daves 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 Bagger Daves will offset losses from the drop in Bagger Daves' long position.

The idea behind Yum China Holdings and Bagger Daves Burger pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.