Correlation Between Yatsen Holding and Henkel AG

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

By analyzing existing cross correlation between Yatsen Holding and Henkel AG Co, you can compare the effects of market volatilities on Yatsen Holding and Henkel AG 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 Henkel AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yatsen Holding and Henkel AG.

Diversification Opportunities for Yatsen Holding and Henkel AG

-0.66

Correlation Coefficient

Yatsen Holding  Henkel AG

Excellent diversification

The 3 months correlation between Yatsen and Henkel is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Yatsen Holding and Henkel AG Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henkel AG 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 Henkel AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henkel AG has no effect on the direction of Yatsen Holding i.e., Yatsen Holding and Henkel AG go up and down completely randomly.

Pair Corralation between Yatsen Holding and Henkel AG

Considering the 90-day investment horizon Yatsen Holding is expected to generate 1.83 times more return on investment than Henkel AG. However, Yatsen Holding is 1.83 times more volatile than Henkel AG Co. It trades about 0.21 of its potential returns per unit of risk. Henkel AG Co is currently generating about -0.01 per unit of risk. If you would invest  323.00  in Yatsen Holding on September 16, 2024 and sell it today you would earn a total of  154.00  from holding Yatsen Holding or generate 47.68% return on investment over 90 days.

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

Yatsen Holding  vs.  Henkel AG Co

Yatsen Holding

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Yatsen Holding are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Yatsen Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Henkel AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henkel AG Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Henkel AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Yatsen Holding and Henkel AG

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

The idea behind Yatsen Holding and Henkel AG Co 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.