Correlation Between Cannae Holdings and RLX Technology
Can any of the company-specific risk be diversified away by investing in both Cannae Holdings 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 Cannae Holdings and RLX Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cannae Holdings and RLX Technology, you can compare the effects of market volatilities on Cannae Holdings 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 Cannae Holdings with a short position of RLX Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cannae Holdings and RLX Technology.
Diversification Opportunities for Cannae Holdings and RLX Technology
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cannae and RLX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and Cannae Holdings 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 Cannae Holdings 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 Cannae Holdings i.e., Cannae Holdings and RLX Technology go up and down completely randomly.
Pair Corralation between Cannae Holdings and RLX Technology
Given the investment horizon of 90 days Cannae Holdings is expected to under-perform the RLX Technology. But the stock apears to be less risky and, when comparing its historical volatility, Cannae Holdings is 2.2 times less risky than RLX Technology. The stock trades about -0.09 of its potential returns per unit of risk. The RLX Technology is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 160.00 in RLX Technology on September 12, 2024 and sell it today you would earn a total of 31.00 from holding RLX Technology or generate 19.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cannae Holdings vs. RLX Technology
Performance |
| Timeline |
| Cannae Holdings |
| RLX Technology |
Cannae Holdings and RLX Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cannae Holdings and RLX Technology
The main advantage of trading using opposite Cannae Holdings and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannae Holdings 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.| Cannae Holdings vs. Brightsphere Investment Group | Cannae Holdings vs. Adtalem Global Education | Cannae Holdings vs. Hamilton Lane | Cannae Holdings vs. ConnectOne Bancorp |
| RLX Technology vs. Universal | RLX Technology vs. Imperial Brands PLC | RLX Technology vs. British American Tobacco | RLX Technology vs. Philip Morris International |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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