Correlation Between Merit Medical and RLX Technology
Can any of the company-specific risk be diversified away by investing in both Merit Medical 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 Merit Medical and RLX Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and RLX Technology, you can compare the effects of market volatilities on Merit Medical 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 Merit Medical with a short position of RLX Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and RLX Technology.
Diversification Opportunities for Merit Medical and RLX Technology
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Merit and RLX is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and Merit Medical 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 Merit Medical Systems 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 Merit Medical i.e., Merit Medical and RLX Technology go up and down completely randomly.
Pair Corralation between Merit Medical and RLX Technology
Given the investment horizon of 90 days Merit Medical is expected to generate 3.51 times less return on investment than RLX Technology. But when comparing it to its historical volatility, Merit Medical Systems is 2.15 times less risky than RLX Technology. It trades about 0.23 of its potential returns per unit of risk. RLX Technology is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 162.00 in RLX Technology on September 4, 2024 and sell it today you would earn a total of 35.00 from holding RLX Technology or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. RLX Technology
Performance |
| Timeline |
| Merit Medical Systems |
| RLX Technology |
Merit Medical and RLX Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and RLX Technology
The main advantage of trading using opposite Merit Medical and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical 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.| Merit Medical vs. Baxter International | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ResMed Inc | Merit Medical vs. The Cooper Companies, |
| RLX Technology vs. Green Globe International | RLX Technology vs. Kaival Brands Innovations | RLX Technology vs. Greenlane Holdings | RLX Technology vs. 22nd Century Group |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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