Correlation Between RLX TECH and Healthequity

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

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

Diversification Opportunities for RLX TECH and Healthequity

0.54

Correlation Coefficient

RLX TECH  Healthequity

Very weak diversification

The 3 months correlation between RLX and Healthequity is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding RLX TECH SPADR1 and Healthequity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthequity and RLX TECH 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 RLX TECH SPADR1 are associated (or correlated) with Healthequity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthequity has no effect on the direction of RLX TECH i.e., RLX TECH and Healthequity go up and down completely randomly.

Pair Corralation between RLX TECH and Healthequity

Assuming the 90 days horizon RLX TECH is expected to generate 7.23 times less return on investment than Healthequity. In addition to that, RLX TECH is 1.41 times more volatile than Healthequity. It trades about 0.0 of its total potential returns per unit of risk. Healthequity is currently generating about 0.05 per unit of volatility. If you would invest  5,750  in Healthequity on September 24, 2024 and sell it today you would earn a total of  3,300  from holding Healthequity or generate 57.39% return on investment over 90 days.

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

RLX TECH SPADR1  vs.  Healthequity

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.

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.

Pair Trading with RLX TECH and Healthequity

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

The idea behind RLX TECH SPADR1 and Healthequity 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.