Correlation Between Yatsen Holding and Natura Co

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

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

Diversification Opportunities for Yatsen Holding and Natura Co

0.77

Correlation Coefficient

Yatsen Holding  Natura Co

Poor diversification

The 3 months correlation between Yatsen and Natura is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Yatsen Holding and Natura Co Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natura Co Holding 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 Natura Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natura Co Holding has no effect on the direction of Yatsen Holding i.e., Yatsen Holding and Natura Co go up and down completely randomly.

Pair Corralation between Yatsen Holding and Natura Co

If you would invest  401.00  in Yatsen Holding on September 16, 2024 and sell it today you would earn a total of  76.00  from holding Yatsen Holding or generate 18.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Yatsen Holding  vs.  Natura Co Holding

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 weak basic indicators, Yatsen Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Natura Co Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yatsen Holding and Natura Co

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

The idea behind Yatsen Holding and Natura Co Holding 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.

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 the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.