Correlation Between Check Point and RLX TECH
Can any of the company-specific risk be diversified away by investing in both Check Point and RLX TECH 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 Check Point and RLX TECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Check Point Software and RLX TECH SPADR1, you can compare the effects of market volatilities on Check Point and RLX TECH 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 Check Point with a short position of RLX TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and RLX TECH.
Diversification Opportunities for Check Point and RLX TECH
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Check and RLX is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and RLX TECH SPADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX TECH SPADR1 and Check Point 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 Check Point Software are associated (or correlated) with RLX TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLX TECH SPADR1 has no effect on the direction of Check Point i.e., Check Point and RLX TECH go up and down completely randomly.
Pair Corralation between Check Point and RLX TECH
Assuming the 90 days trading horizon Check Point is expected to generate 2.49 times less return on investment than RLX TECH. But when comparing it to its historical volatility, Check Point Software is 1.58 times less risky than RLX TECH. It trades about 0.32 of its potential returns per unit of risk. RLX TECH SPADR1 is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 146.00 in RLX TECH SPADR1 on September 3, 2024 and sell it today you would earn a total of 39.00 from holding RLX TECH SPADR1 or generate 26.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. RLX TECH SPADR1
Performance |
| Timeline |
| Check Point Software |
| RLX TECH SPADR1 |
Check Point and RLX TECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and RLX TECH
The main advantage of trading using opposite Check Point and RLX TECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, RLX TECH 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 TECH will offset losses from the drop in RLX TECH's long position.| Check Point vs. Alfa Financial Software | Check Point vs. ASURE SOFTWARE | Check Point vs. CPU SOFTWAREHOUSE | Check Point vs. USU Software AG |
| RLX TECH vs. Alaska Air Group | RLX TECH vs. MOVIE GAMES SA | RLX TECH vs. Apollo Investment Corp | RLX TECH vs. PennyMac Mortgage Investment |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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