Correlation Between Healthequity and RLX TECH

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

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

Diversification Opportunities for Healthequity and RLX TECH

0.54

Correlation Coefficient

Healthequity  RLX TECH

Very weak diversification

The 3 months correlation between Healthequity and RLX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Healthequity 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 Healthequity 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 Healthequity 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 Healthequity i.e., Healthequity and RLX TECH go up and down completely randomly.

Pair Corralation between Healthequity and RLX TECH

Assuming the 90 days horizon Healthequity is expected to generate 0.71 times more return on investment than RLX TECH. However, Healthequity is 1.42 times less risky than RLX TECH. It trades about 0.16 of its potential returns per unit of risk. RLX TECH SPADR1 is currently generating about 0.09 per unit of risk. If you would invest  7,100  in Healthequity on September 24, 2024 and sell it today you would earn a total of  1,950  from holding Healthequity or generate 27.46% return on investment over 90 days.

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

Healthequity  vs.  RLX TECH SPADR1

Healthequity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Healthequity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Healthequity reported solid returns over the last few months and may actually be approaching a breakup point.

RLX TECH SPADR1

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RLX TECH SPADR1 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RLX TECH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthequity and RLX TECH

The main advantage of trading using opposite Healthequity and RLX TECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthequity 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 Healthequity 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.