Correlation Between Kaival Brands and RLX Technology

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

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

Diversification Opportunities for Kaival Brands and RLX Technology

0.39

Correlation Coefficient

Kaival Brands  RLX Technology

Weak diversification

The 3 months correlation between Kaival and RLX is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kaival Brands Innovations and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and Kaival Brands 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 Kaival Brands Innovations 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 Kaival Brands i.e., Kaival Brands and RLX Technology go up and down completely randomly.

Pair Corralation between Kaival Brands and RLX Technology

Given the investment horizon of 90 days Kaival Brands Innovations is expected to under-perform the RLX Technology. In addition to that, Kaival Brands is 2.41 times more volatile than RLX Technology. It trades about -0.04 of its total potential returns per unit of risk. RLX Technology is currently generating about -0.02 per unit of volatility. If you would invest  212.00  in RLX Technology on December 27, 2024 and sell it today you would lose (16.00) from holding RLX Technology or give up 7.55% of portfolio value over 90 days.

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

Kaival Brands Innovations  vs.  RLX Technology

Kaival Brands Innovations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaival Brands Innovations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

RLX Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days RLX Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, RLX Technology is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kaival Brands and RLX Technology

The main advantage of trading using opposite Kaival Brands and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaival Brands 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 Kaival Brands Innovations 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.