Correlation Between NexteGO NV and RLX Technology

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

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

Diversification Opportunities for NexteGO NV and RLX Technology

-0.33

Correlation Coefficient

NexteGO NV  RLX Technology

Very good diversification

The 3 months correlation between NexteGO and RLX is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NexteGO NV Ordinary and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and NexteGO NV 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 NexteGO NV Ordinary are associated (or correlated) with RLX Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLX Technology has no effect on the direction of NexteGO NV i.e., NexteGO NV and RLX Technology go up and down completely randomly.

Pair Corralation between NexteGO NV and RLX Technology

Given the investment horizon of 90 days NexteGO NV Ordinary is expected to under-perform the RLX Technology. In addition to that, NexteGO NV is 9.17 times more volatile than RLX Technology. It trades about -0.03 of its total potential returns per unit of risk. RLX Technology is currently generating about 0.0 per unit of volatility. If you would invest  264.00  in RLX Technology on September 4, 2024 and sell it today you would lose (67.00) from holding RLX Technology or give up 25.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.37%
Values	Daily Returns

NexteGO NV Ordinary  vs.  RLX Technology

NexteGO NV Ordinary

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NexteGO NV Ordinary are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, NexteGO NV showed solid returns over the last few months and may actually be approaching a breakup point.

RLX Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RLX Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent essential indicators, RLX Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NexteGO NV and RLX Technology

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

The idea behind NexteGO NV Ordinary and RLX Technology 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.