Correlation Between RLX Technology and NetEase

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

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

Diversification Opportunities for RLX Technology and NetEase

0.67

Correlation Coefficient

RLX Technology  NetEase

Poor diversification

The 3 months correlation between RLX and NetEase is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding RLX Technology and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and RLX Technology 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 RLX Technology are associated (or correlated) with NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of RLX Technology i.e., RLX Technology and NetEase go up and down completely randomly.

Pair Corralation between RLX Technology and NetEase

Considering the 90-day investment horizon RLX Technology is expected to generate 4.26 times less return on investment than NetEase. In addition to that, RLX Technology is 1.3 times more volatile than NetEase. It trades about 0.0 of its total potential returns per unit of risk. NetEase is currently generating about 0.02 per unit of volatility. If you would invest  8,050  in NetEase on October 5, 2024 and sell it today you would earn a total of  788.00  from holding NetEase or generate 9.79% return on investment over 90 days.

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

RLX Technology  vs.  NetEase

RLX Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RLX Technology are ranked lower than 9 (%) 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.

NetEase

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NetEase has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with RLX Technology and NetEase

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

The idea behind RLX Technology and NetEase 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 Commodity Directory module to find actively traded commodities issued by global exchanges.