Correlation Between Yum Brands and Amkor Technology

Can any of the company-specific risk be diversified away by investing in both Yum Brands and Amkor Technology 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 Amkor Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yum Brands and Amkor Technology, you can compare the effects of market volatilities on Yum Brands and Amkor Technology 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 Amkor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Amkor Technology.

Diversification Opportunities for Yum Brands and Amkor Technology

-0.11

Correlation Coefficient

Yum Brands  Amkor Technology

Good diversification

The 3 months correlation between Yum and Amkor is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology 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 Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of Yum Brands i.e., Yum Brands and Amkor Technology go up and down completely randomly.

Pair Corralation between Yum Brands and Amkor Technology

Considering the 90-day investment horizon Yum Brands is expected to generate 0.34 times more return on investment than Amkor Technology. However, Yum Brands is 2.9 times less risky than Amkor Technology. It trades about 0.03 of its potential returns per unit of risk. Amkor Technology is currently generating about 0.01 per unit of risk. If you would invest  12,392  in Yum Brands on September 23, 2024 and sell it today you would earn a total of  844.00  from holding Yum Brands or generate 6.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Yum Brands  vs.  Amkor Technology

Yum Brands

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yum Brands are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Yum Brands is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Amkor Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amkor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Yum Brands and Amkor Technology

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

The idea behind Yum Brands and Amkor Technology 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.