Correlation Between Yatsen Holding and Spectrum Brands

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

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

Diversification Opportunities for Yatsen Holding and Spectrum Brands

-0.47

Correlation Coefficient

Yatsen Holding  Spectrum Brands

Very good diversification

The 3 months correlation between Yatsen and Spectrum is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Yatsen Holding and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings 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 Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of Yatsen Holding i.e., Yatsen Holding and Spectrum Brands go up and down completely randomly.

Pair Corralation between Yatsen Holding and Spectrum Brands

Considering the 90-day investment horizon Yatsen Holding is expected to generate 4.24 times more return on investment than Spectrum Brands. However, Yatsen Holding is 4.24 times more volatile than Spectrum Brands Holdings. It trades about 0.44 of its potential returns per unit of risk. Spectrum Brands Holdings is currently generating about -0.14 per unit of risk. If you would invest  257.00  in Yatsen Holding on February 2, 2024 and sell it today you would earn a total of  158.00  from holding Yatsen Holding or generate 61.48% 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.  Spectrum Brands Holdings

Yatsen Holding

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yatsen Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Yatsen Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Spectrum Brands Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Brands Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Spectrum Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Yatsen Holding and Spectrum Brands

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

The idea behind Yatsen Holding and Spectrum Brands Holdings 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.