Correlation Between Limoneira and RLX Technology

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

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

Diversification Opportunities for Limoneira and RLX Technology

-0.47

Correlation Coefficient

Limoneira  RLX Technology

Very good diversification

The 3 months correlation between Limoneira and RLX is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Limoneira Co and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and Limoneira 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 Limoneira Co 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 Limoneira i.e., Limoneira and RLX Technology go up and down completely randomly.

Pair Corralation between Limoneira and RLX Technology

Given the investment horizon of 90 days Limoneira Co is expected to generate 0.8 times more return on investment than RLX Technology. However, Limoneira Co is 1.24 times less risky than RLX Technology. It trades about 0.07 of its potential returns per unit of risk. RLX Technology is currently generating about 0.04 per unit of risk. If you would invest  1,814  in Limoneira Co on October 6, 2024 and sell it today you would earn a total of  620.00  from holding Limoneira Co or generate 34.18% return on investment over 90 days.

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

Limoneira Co  vs.  RLX Technology

Limoneira

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Limoneira Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

RLX Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RLX Technology are ranked lower than 8 (%) 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 Limoneira and RLX Technology

The main advantage of trading using opposite Limoneira and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Limoneira 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 Limoneira Co 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..