Correlation Between RLX Technology and 70466WAA7

Can any of the company-specific risk be diversified away by investing in both RLX Technology and 70466WAA7 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 70466WAA7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RLX Technology and US70466WAA71, you can compare the effects of market volatilities on RLX Technology and 70466WAA7 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 70466WAA7. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLX Technology and 70466WAA7.

Diversification Opportunities for RLX Technology and 70466WAA7

0.65

Correlation Coefficient

RLX Technology  70466WAA7

Poor diversification

The 3 months correlation between RLX and 70466WAA7 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding RLX Technology and US70466WAA71 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US70466WAA71 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 70466WAA7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US70466WAA71 has no effect on the direction of RLX Technology i.e., RLX Technology and 70466WAA7 go up and down completely randomly.

Pair Corralation between RLX Technology and 70466WAA7

Considering the 90-day investment horizon RLX Technology is expected to generate 2.75 times more return on investment than 70466WAA7. However, RLX Technology is 2.75 times more volatile than US70466WAA71. It trades about 0.18 of its potential returns per unit of risk. US70466WAA71 is currently generating about -0.15 per unit of risk. If you would invest  170.00  in RLX Technology on October 26, 2024 and sell it today you would earn a total of  46.00  from holding RLX Technology or generate 27.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	38.98%
Values	Daily Returns

RLX Technology  vs.  US70466WAA71

RLX Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RLX Technology are ranked lower than 14 (%) 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.

US70466WAA71

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US70466WAA71 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for US70466WAA71 investors.

Pair Trading with RLX Technology and 70466WAA7

The main advantage of trading using opposite RLX Technology and 70466WAA7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLX Technology position performs unexpectedly, 70466WAA7 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 70466WAA7 will offset losses from the drop in 70466WAA7's long position.

The idea behind RLX Technology and US70466WAA71 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 Global Correlations module to find global opportunities by holding instruments from different markets.