Correlation Between Materialise and RLX TECH

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

By analyzing existing cross correlation between Materialise NV and RLX TECH SPADR1, you can compare the effects of market volatilities on Materialise and RLX TECH 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 Materialise with a short position of RLX TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and RLX TECH.

Diversification Opportunities for Materialise and RLX TECH

0.27

Correlation Coefficient

Materialise  RLX TECH

Modest diversification

The 3 months correlation between Materialise and RLX is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and RLX TECH SPADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX TECH SPADR1 and Materialise 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 Materialise NV are associated (or correlated) with RLX TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLX TECH SPADR1 has no effect on the direction of Materialise i.e., Materialise and RLX TECH go up and down completely randomly.

Pair Corralation between Materialise and RLX TECH

Assuming the 90 days trading horizon Materialise NV is expected to generate 1.21 times more return on investment than RLX TECH. However, Materialise is 1.21 times more volatile than RLX TECH SPADR1. It trades about 0.05 of its potential returns per unit of risk. RLX TECH SPADR1 is currently generating about 0.05 per unit of risk. If you would invest  550.00  in Materialise NV on October 10, 2024 and sell it today you would earn a total of  165.00  from holding Materialise NV or generate 30.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Materialise NV  vs.  RLX TECH SPADR1

Materialise NV

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

RLX TECH SPADR1

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RLX TECH SPADR1 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, RLX TECH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Materialise and RLX TECH

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

The idea behind Materialise NV and RLX TECH SPADR1 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.