Correlation Between Yum China and Uxin

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

Diversification Opportunities for Yum China and Uxin

-0.33

Correlation Coefficient

Yum China  Uxin

Very good diversification

The 3 months correlation between Yum and Uxin is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Yum China Holdings and Uxin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uxin 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 Uxin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uxin has no effect on the direction of Yum China i.e., Yum China and Uxin go up and down completely randomly.

Pair Corralation between Yum China and Uxin

Given the investment horizon of 90 days Yum China Holdings is expected to generate 0.52 times more return on investment than Uxin. However, Yum China Holdings is 1.91 times less risky than Uxin. It trades about 0.05 of its potential returns per unit of risk. Uxin is currently generating about -0.01 per unit of risk. If you would invest  4,979  in Yum China Holdings on December 26, 2024 and sell it today you would earn a total of  251.00  from holding Yum China Holdings or generate 5.04% return on investment over 90 days.

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

Yum China Holdings  vs.  Uxin

Yum China Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yum China Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Yum China may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Uxin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Uxin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Uxin is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Yum China and Uxin

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

The idea behind Yum China Holdings and Uxin 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.