Correlation Between Yatsen Holding and Coty

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

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

Diversification Opportunities for Yatsen Holding and Coty

-0.48

Correlation Coefficient

Yatsen Holding  Coty

Very good diversification

The 3 months correlation between Yatsen and Coty is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Yatsen Holding and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc and Yatsen Holding 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 Yatsen Holding are associated (or correlated) with Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of Yatsen Holding i.e., Yatsen Holding and Coty go up and down completely randomly.

Pair Corralation between Yatsen Holding and Coty

Considering the 90-day investment horizon Yatsen Holding is expected to generate 2.27 times more return on investment than Coty. However, Yatsen Holding is 2.27 times more volatile than Coty Inc. It trades about 0.08 of its potential returns per unit of risk. Coty Inc is currently generating about -0.15 per unit of risk. If you would invest  443.00  in Yatsen Holding on December 27, 2024 and sell it today you would earn a total of  91.00  from holding Yatsen Holding or generate 20.54% return on investment over 90 days.

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

Yatsen Holding  vs.  Coty Inc

Yatsen Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yatsen Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Yatsen Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Coty Inc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Yatsen Holding and Coty

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

The idea behind Yatsen Holding and Coty Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.