Correlation Between TAAT Global and RLX Technology

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

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

Diversification Opportunities for TAAT Global and RLX Technology

0.33

Correlation Coefficient

TAAT Global  RLX Technology

Weak diversification

The 3 months correlation between TAAT and RLX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding TAAT Global Alternatives and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and TAAT Global 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 TAAT Global Alternatives 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 TAAT Global i.e., TAAT Global and RLX Technology go up and down completely randomly.

Pair Corralation between TAAT Global and RLX Technology

Assuming the 90 days horizon TAAT Global Alternatives is expected to generate 4.56 times more return on investment than RLX Technology. However, TAAT Global is 4.56 times more volatile than RLX Technology. It trades about 0.12 of its potential returns per unit of risk. RLX Technology is currently generating about 0.0 per unit of risk. If you would invest  9.68  in TAAT Global Alternatives on December 26, 2024 and sell it today you would earn a total of  6.32  from holding TAAT Global Alternatives or generate 65.29% return on investment over 90 days.

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

TAAT Global Alternatives  vs.  RLX Technology

TAAT Global Alternatives

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TAAT Global Alternatives are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, TAAT Global reported solid returns over the last few months and may actually be approaching a breakup point.

RLX Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days RLX Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, RLX Technology is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TAAT Global and RLX Technology

The main advantage of trading using opposite TAAT Global and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAAT Global 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 TAAT Global Alternatives 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.