Correlation Between RLX TECH and SPORTING

Can any of the company-specific risk be diversified away by investing in both RLX TECH and SPORTING 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 SPORTING 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 SPORTING, you can compare the effects of market volatilities on RLX TECH and SPORTING 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 SPORTING. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLX TECH and SPORTING.

Diversification Opportunities for RLX TECH and SPORTING

-0.59

Correlation Coefficient

RLX TECH  SPORTING

Excellent diversification

The 3 months correlation between RLX and SPORTING is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding RLX TECH SPADR1 and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of RLX TECH i.e., RLX TECH and SPORTING go up and down completely randomly.

Pair Corralation between RLX TECH and SPORTING

Assuming the 90 days horizon RLX TECH is expected to generate 2.04 times less return on investment than SPORTING. In addition to that, RLX TECH is 1.38 times more volatile than SPORTING. It trades about 0.01 of its total potential returns per unit of risk. SPORTING is currently generating about 0.02 per unit of volatility. If you would invest  85.00  in SPORTING on October 5, 2024 and sell it today you would earn a total of  7.00  from holding SPORTING or generate 8.24% return on investment over 90 days.

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

RLX TECH SPADR1  vs.  SPORTING

RLX TECH SPADR1

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days RLX TECH SPADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, RLX TECH reported solid returns over the last few months and may actually be approaching a breakup point.

SPORTING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORTING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with RLX TECH and SPORTING

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

The idea behind RLX TECH SPADR1 and SPORTING 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.