Correlation Between HONEYWELL and RLX Technology

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

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

Diversification Opportunities for HONEYWELL and RLX Technology

-0.52

Correlation Coefficient

HONEYWELL  RLX Technology

Excellent diversification

The 3 months correlation between HONEYWELL and RLX is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding HONEYWELL INTERNATIONAL INC and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and HONEYWELL 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 HONEYWELL INTERNATIONAL INC 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 HONEYWELL i.e., HONEYWELL and RLX Technology go up and down completely randomly.

Pair Corralation between HONEYWELL and RLX Technology

Assuming the 90 days trading horizon HONEYWELL INTERNATIONAL INC is expected to under-perform the RLX Technology. But the bond apears to be less risky and, when comparing its historical volatility, HONEYWELL INTERNATIONAL INC is 1.28 times less risky than RLX Technology. The bond trades about -0.29 of its potential returns per unit of risk. The RLX Technology is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  193.00  in RLX Technology on October 10, 2024 and sell it today you would earn a total of  27.00  from holding RLX Technology or generate 13.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

HONEYWELL INTERNATIONAL INC  vs.  RLX Technology

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HONEYWELL INTERNATIONAL INC 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 HONEYWELL INTERNATIONAL INC investors.

RLX Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RLX Technology are ranked lower than 13 (%) 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 HONEYWELL and RLX Technology

The main advantage of trading using opposite HONEYWELL and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HONEYWELL 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 HONEYWELL INTERNATIONAL INC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.