Correlation Between NaturalShrimp and RLX Technology

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

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

Diversification Opportunities for NaturalShrimp and RLX Technology

-0.63

Correlation Coefficient

NaturalShrimp  RLX Technology

Excellent diversification

The 3 months correlation between NaturalShrimp and RLX is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding NaturalShrimp and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and NaturalShrimp 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 NaturalShrimp 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 NaturalShrimp i.e., NaturalShrimp and RLX Technology go up and down completely randomly.

Pair Corralation between NaturalShrimp and RLX Technology

Given the investment horizon of 90 days NaturalShrimp is expected to generate 4.75 times more return on investment than RLX Technology. However, NaturalShrimp is 4.75 times more volatile than RLX Technology. It trades about 0.01 of its potential returns per unit of risk. RLX Technology is currently generating about 0.04 per unit of risk. If you would invest  1.20  in NaturalShrimp on October 6, 2024 and sell it today you would lose (0.86) from holding NaturalShrimp or give up 71.67% of portfolio value over 90 days.

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

NaturalShrimp  vs.  RLX Technology

NaturalShrimp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NaturalShrimp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, NaturalShrimp reported solid returns over the last few months and may actually be approaching a breakup point.

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 NaturalShrimp and RLX Technology

The main advantage of trading using opposite NaturalShrimp and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NaturalShrimp 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 NaturalShrimp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.