Correlation Between Naked Wines and RLX Technology
Can any of the company-specific risk be diversified away by investing in both Naked Wines 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 Naked Wines and RLX Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naked Wines plc and RLX Technology, you can compare the effects of market volatilities on Naked Wines 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 Naked Wines with a short position of RLX Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and RLX Technology.
Diversification Opportunities for Naked Wines and RLX Technology
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Naked and RLX is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and Naked Wines 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 Naked Wines plc 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 Naked Wines i.e., Naked Wines and RLX Technology go up and down completely randomly.
Pair Corralation between Naked Wines and RLX Technology
Assuming the 90 days horizon Naked Wines is expected to generate 1.02 times less return on investment than RLX Technology. But when comparing it to its historical volatility, Naked Wines plc is 1.51 times less risky than RLX Technology. It trades about 0.22 of its potential returns per unit of risk. RLX Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 170.00 in RLX Technology on August 28, 2024 and sell it today you would earn a total of 13.00 from holding RLX Technology or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Naked Wines plc vs. RLX Technology
Performance |
| Timeline |
| Naked Wines plc |
| RLX Technology |
Naked Wines and RLX Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and RLX Technology
The main advantage of trading using opposite Naked Wines and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines 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.| Naked Wines vs. Diageo PLC ADR | Naked Wines vs. Constellation Brands Class | Naked Wines vs. Morningstar Unconstrained Allocation | Naked Wines vs. SEI Investments |
| RLX Technology vs. Bellring Brands LLC | RLX Technology vs. Ingredion Incorporated | RLX Technology vs. Nomad Foods | RLX Technology vs. Simply Good Foods |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stocks Directory Find actively traded stocks across global markets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |