Correlation Between Yatsen Holding and Yoshitsu

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

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

Diversification Opportunities for Yatsen Holding and Yoshitsu

-0.84

Correlation Coefficient

Yatsen Holding  Yoshitsu

Pay attention - limited upside

The 3 months correlation between Yatsen and Yoshitsu is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Yatsen Holding and Yoshitsu Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yoshitsu 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 Yoshitsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yoshitsu has no effect on the direction of Yatsen Holding i.e., Yatsen Holding and Yoshitsu go up and down completely randomly.

Pair Corralation between Yatsen Holding and Yoshitsu

Considering the 90-day investment horizon Yatsen Holding is expected to generate 0.43 times more return on investment than Yoshitsu. However, Yatsen Holding is 2.33 times less risky than Yoshitsu. It trades about 0.22 of its potential returns per unit of risk. Yoshitsu Co Ltd is currently generating about -0.07 per unit of risk. If you would invest  332.00  in Yatsen Holding on September 12, 2024 and sell it today you would earn a total of  165.00  from holding Yatsen Holding or generate 49.7% return on investment over 90 days.

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

Yatsen Holding  vs.  Yoshitsu Co Ltd

Yatsen Holding

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Yatsen Holding are ranked lower than 17 (%) 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.

Yoshitsu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yoshitsu Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Yatsen Holding and Yoshitsu

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

The idea behind Yatsen Holding and Yoshitsu Co Ltd 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.