Correlation Between Infinity Pharmaceuticals and Yum Brands

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

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

Diversification Opportunities for Infinity Pharmaceuticals and Yum Brands

0.0

Correlation Coefficient

Infinity Pharmaceuticals  Yum Brands

Pay attention - limited upside

The 3 months correlation between Infinity and Yum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Infinity Pharmaceuticals and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and Infinity Pharmaceuticals 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 Infinity Pharmaceuticals are associated (or correlated) with Yum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum Brands has no effect on the direction of Infinity Pharmaceuticals i.e., Infinity Pharmaceuticals and Yum Brands go up and down completely randomly.

Pair Corralation between Infinity Pharmaceuticals and Yum Brands

If you would invest  13,289  in Yum Brands on December 28, 2024 and sell it today you would earn a total of  2,579  from holding Yum Brands or generate 19.41% return on investment over 90 days.

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

Infinity Pharmaceuticals  vs.  Yum Brands

Infinity Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infinity Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Infinity Pharmaceuticals is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Yum Brands

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yum Brands are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Yum Brands displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infinity Pharmaceuticals and Yum Brands

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

The idea behind Infinity Pharmaceuticals and Yum Brands 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.