Correlation Between Natura Co and Yatsen Holding
Can any of the company-specific risk be diversified away by investing in both Natura Co and Yatsen Holding 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 Natura Co and Yatsen Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natura Co Holding and Yatsen Holding, you can compare the effects of market volatilities on Natura Co and Yatsen Holding 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 Natura Co with a short position of Yatsen Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natura Co and Yatsen Holding.
Diversification Opportunities for Natura Co and Yatsen Holding
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Natura and Yatsen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Natura Co Holding and Yatsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yatsen Holding and Natura Co 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 Natura Co Holding are associated (or correlated) with Yatsen Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yatsen Holding has no effect on the direction of Natura Co i.e., Natura Co and Yatsen Holding go up and down completely randomly.
Pair Corralation between Natura Co and Yatsen Holding
Given the investment horizon of 90 days Natura Co Holding is expected to generate 0.87 times more return on investment than Yatsen Holding. However, Natura Co Holding is 1.15 times less risky than Yatsen Holding. It trades about 0.1 of its potential returns per unit of risk. Yatsen Holding is currently generating about 0.01 per unit of risk. If you would invest 457.00 in Natura Co Holding on August 26, 2024 and sell it today you would earn a total of 295.00 from holding Natura Co Holding or generate 64.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.99% |
| Values | Daily Returns |
Natura Co Holding vs. Yatsen Holding
Performance |
| Timeline |
| Natura Co Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Yatsen Holding |
Natura Co and Yatsen Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natura Co and Yatsen Holding
The main advantage of trading using opposite Natura Co and Yatsen Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natura Co position performs unexpectedly, Yatsen Holding 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 Yatsen Holding will offset losses from the drop in Yatsen Holding's long position.| Natura Co vs. Mannatech Incorporated | Natura Co vs. Edgewell Personal Care | Natura Co vs. Inter Parfums | Natura Co vs. Nu Skin Enterprises |
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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 the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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