Correlation Between Ke Holdings and Yatsen Holding

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

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

Diversification Opportunities for Ke Holdings and Yatsen Holding

-0.31

Correlation Coefficient

Ke Holdings  Yatsen Holding

Very good diversification

The 3 months correlation between BEKE and Yatsen is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ke Holdings and Yatsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yatsen Holding and Ke Holdings 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 Ke Holdings 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 Ke Holdings i.e., Ke Holdings and Yatsen Holding go up and down completely randomly.

Pair Corralation between Ke Holdings and Yatsen Holding

Given the investment horizon of 90 days Ke Holdings is expected to generate 1.65 times less return on investment than Yatsen Holding. In addition to that, Ke Holdings is 1.22 times more volatile than Yatsen Holding. It trades about 0.06 of its total potential returns per unit of risk. Yatsen Holding is currently generating about 0.13 per unit of volatility. If you would invest  291.00  in Yatsen Holding on September 25, 2024 and sell it today you would earn a total of  186.00  from holding Yatsen Holding or generate 63.92% return on investment over 90 days.

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

Ke Holdings  vs.  Yatsen Holding

Ke Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ke Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, Ke Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Yatsen Holding

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yatsen Holding are ranked lower than 13 (%) 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.

Pair Trading with Ke Holdings and Yatsen Holding

The main advantage of trading using opposite Ke Holdings and Yatsen Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ke Holdings 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.

The idea behind Ke Holdings and Yatsen 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.