Correlation Between Moleculin Biotech and Yum China

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Can any of the company-specific risk be diversified away by investing in both Moleculin Biotech and Yum China 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 Moleculin Biotech and Yum China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moleculin Biotech CS and Yum China Holdings, you can compare the effects of market volatilities on Moleculin Biotech and Yum China 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 Moleculin Biotech with a short position of Yum China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moleculin Biotech and Yum China.

Diversification Opportunities for Moleculin Biotech and Yum China

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Moleculin and Yum China is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Moleculin Biotech CS and Yum China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum China Holdings and Moleculin Biotech 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 Moleculin Biotech CS are associated (or correlated) with Yum China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum China Holdings has no effect on the direction of Moleculin Biotech i.e., Moleculin Biotech and Yum China go up and down completely randomly.

Pair Corralation between Moleculin Biotech and Yum China

Given the investment horizon of 90 days Moleculin Biotech CS is expected to under-perform the Yum China. In addition to that, Moleculin Biotech is 1.68 times more volatile than Yum China Holdings. It trades about -0.04 of its total potential returns per unit of risk. Yum China Holdings is currently generating about 0.01 per unit of volatility. If you would invest  5,646  in Yum China Holdings on September 1, 2022 and sell it today you would lose (303.00)  from holding Yum China Holdings or give up 5.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Moleculin Biotech CS  vs.  Yum China Holdings

 Performance (%) 
       Timeline  
Moleculin Biotech 
Moleculin Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Moleculin Biotech CS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Moleculin Biotech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Moleculin Price Channel

Yum China Holdings 
Yum China Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Yum China Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady primary indicators, Yum China sustained solid returns over the last few months and may actually be approaching a breakup point.

Yum China Price Channel

Moleculin Biotech and Yum China Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Moleculin Biotech and Yum China

The main advantage of trading using opposite Moleculin Biotech and Yum China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moleculin Biotech position performs unexpectedly, Yum China 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 China will offset losses from the drop in Yum China's long position.
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The idea behind Moleculin Biotech CS and Yum China Holdings 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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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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