Correlation Between RLX TECH and SHIN ETSU

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

Diversification Opportunities for RLX TECH and SHIN ETSU

-0.53

Correlation Coefficient

RLX TECH  SHIN ETSU

Excellent diversification

The 3 months correlation between RLX and SHIN is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding RLX TECH SPADR1 and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL 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 SHIN ETSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIN ETSU CHEMICAL has no effect on the direction of RLX TECH i.e., RLX TECH and SHIN ETSU go up and down completely randomly.

Pair Corralation between RLX TECH and SHIN ETSU

Assuming the 90 days horizon RLX TECH is expected to generate 3.4 times less return on investment than SHIN ETSU. In addition to that, RLX TECH is 1.56 times more volatile than SHIN ETSU CHEMICAL. It trades about 0.01 of its total potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about 0.04 per unit of volatility. If you would invest  2,249  in SHIN ETSU CHEMICAL on September 29, 2024 and sell it today you would earn a total of  952.00  from holding SHIN ETSU CHEMICAL or generate 42.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

RLX TECH SPADR1  vs.  SHIN ETSU CHEMICAL

RLX TECH SPADR1

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RLX TECH SPADR1 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, RLX TECH reported solid returns over the last few months and may actually be approaching a breakup point.

SHIN ETSU CHEMICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIN ETSU CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with RLX TECH and SHIN ETSU

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

The idea behind RLX TECH SPADR1 and SHIN ETSU CHEMICAL 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.