Correlation Between RLX Technology and 071734AP2

Can any of the company-specific risk be diversified away by investing in both RLX Technology and 071734AP2 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 071734AP2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RLX Technology and US071734AP21, you can compare the effects of market volatilities on RLX Technology and 071734AP2 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 071734AP2. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLX Technology and 071734AP2.

Diversification Opportunities for RLX Technology and 071734AP2

-0.23

Correlation Coefficient

RLX Technology  071734AP2

Very good diversification

The 3 months correlation between RLX and 071734AP2 is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding RLX Technology and US071734AP21 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US071734AP21 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 071734AP2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US071734AP21 has no effect on the direction of RLX Technology i.e., RLX Technology and 071734AP2 go up and down completely randomly.

Pair Corralation between RLX Technology and 071734AP2

Considering the 90-day investment horizon RLX Technology is expected to generate 1.12 times more return on investment than 071734AP2. However, RLX Technology is 1.12 times more volatile than US071734AP21. It trades about 0.26 of its potential returns per unit of risk. US071734AP21 is currently generating about -0.13 per unit of risk. If you would invest  160.00  in RLX Technology on October 23, 2024 and sell it today you would earn a total of  67.00  from holding RLX Technology or generate 41.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.33%
Values	Daily Returns

RLX Technology  vs.  US071734AP21

RLX Technology

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RLX Technology are ranked lower than 20 (%) 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.

US071734AP21

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US071734AP21 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for US071734AP21 investors.

Pair Trading with RLX Technology and 071734AP2

The main advantage of trading using opposite RLX Technology and 071734AP2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLX Technology position performs unexpectedly, 071734AP2 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 071734AP2 will offset losses from the drop in 071734AP2's long position.

The idea behind RLX Technology and US071734AP21 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..