Correlation Between Evolent Health and RLX TECH

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Can any of the company-specific risk be diversified away by investing in both Evolent Health 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 Evolent Health and RLX TECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolent Health and RLX TECH SPADR1, you can compare the effects of market volatilities on Evolent Health 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 Evolent Health with a short position of RLX TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolent Health and RLX TECH.

Diversification Opportunities for Evolent Health and RLX TECH

-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Evolent and RLX is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health 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 Evolent Health 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 Evolent Health 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 Evolent Health i.e., Evolent Health and RLX TECH go up and down completely randomly.

Pair Corralation between Evolent Health and RLX TECH

Assuming the 90 days horizon Evolent Health is expected to generate 1.48 times less return on investment than RLX TECH. In addition to that, Evolent Health is 1.22 times more volatile than RLX TECH SPADR1. It trades about 0.17 of its total potential returns per unit of risk. RLX TECH SPADR1 is currently generating about 0.31 per unit of volatility. If you would invest  189.00  in RLX TECH SPADR1 on October 13, 2024 and sell it today you would earn a total of  21.00  from holding RLX TECH SPADR1 or generate 11.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Evolent Health  vs.  RLX TECH SPADR1

 Performance 
       Timeline  
Evolent Health 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
RLX TECH SPADR1 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in RLX TECH SPADR1 are ranked lower than 18 (%) 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.

Evolent Health and RLX TECH Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Evolent Health and RLX TECH

The main advantage of trading using opposite Evolent Health and RLX TECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolent Health 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 Evolent Health 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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