Correlation Between Amgen and RLX Technology
Can any of the company-specific risk be diversified away by investing in both Amgen 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 Amgen and RLX Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and RLX Technology, you can compare the effects of market volatilities on Amgen 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 Amgen with a short position of RLX Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and RLX Technology.
Diversification Opportunities for Amgen and RLX Technology
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amgen and RLX is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and Amgen 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 Amgen 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 Amgen i.e., Amgen and RLX Technology go up and down completely randomly.
Pair Corralation between Amgen and RLX Technology
Given the investment horizon of 90 days Amgen Inc is expected to under-perform the RLX Technology. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 1.52 times less risky than RLX Technology. The stock trades about -0.2 of its potential returns per unit of risk. The RLX Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 169.00 in RLX Technology on September 12, 2024 and sell it today you would earn a total of 22.00 from holding RLX Technology or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. RLX Technology
Performance |
| Timeline |
| Amgen Inc |
| RLX Technology |
Amgen and RLX Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and RLX Technology
The main advantage of trading using opposite Amgen and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen 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.| Amgen vs. Victory Integrity Smallmid Cap | Amgen vs. Hilton Worldwide Holdings | Amgen vs. NVIDIA | Amgen vs. JPMorgan Chase Co |
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Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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