Correlation Between Keurig Dr and RLX Technology

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

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

Diversification Opportunities for Keurig Dr and RLX Technology

-0.05

Correlation Coefficient

Keurig Dr  RLX Technology

Good diversification

The 3 months correlation between Keurig and RLX is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and Keurig Dr 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 Keurig Dr Pepper 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 Keurig Dr i.e., Keurig Dr and RLX Technology go up and down completely randomly.

Pair Corralation between Keurig Dr and RLX Technology

Considering the 90-day investment horizon Keurig Dr Pepper is expected to generate 0.42 times more return on investment than RLX Technology. However, Keurig Dr Pepper is 2.4 times less risky than RLX Technology. It trades about 0.08 of its potential returns per unit of risk. RLX Technology is currently generating about -0.03 per unit of risk. If you would invest  3,204  in Keurig Dr Pepper on December 27, 2024 and sell it today you would earn a total of  202.00  from holding Keurig Dr Pepper or generate 6.3% return on investment over 90 days.

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

Keurig Dr Pepper  vs.  RLX Technology

Keurig Dr Pepper

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Keurig Dr Pepper are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental indicators, Keurig Dr may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 latest inconsistent performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Keurig Dr and RLX Technology

The main advantage of trading using opposite Keurig Dr and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr 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 Keurig Dr Pepper 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..