Correlation Between The9 and RLX Technology
Can any of the company-specific risk be diversified away by investing in both The9 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 The9 and RLX Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The9 Ltd ADR and RLX Technology, you can compare the effects of market volatilities on The9 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 The9 with a short position of RLX Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of The9 and RLX Technology.
Diversification Opportunities for The9 and RLX Technology
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between The9 and RLX is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding The9 Ltd ADR and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and The9 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 The9 Ltd ADR 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 The9 i.e., The9 and RLX Technology go up and down completely randomly.
Pair Corralation between The9 and RLX Technology
Given the investment horizon of 90 days The9 Ltd ADR is expected to generate 2.09 times more return on investment than RLX Technology. However, The9 is 2.09 times more volatile than RLX Technology. It trades about 0.06 of its potential returns per unit of risk. RLX Technology is currently generating about 0.02 per unit of risk. If you would invest 690.00 in The9 Ltd ADR on August 31, 2024 and sell it today you would earn a total of 785.00 from holding The9 Ltd ADR or generate 113.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The9 Ltd ADR vs. RLX Technology
Performance |
| Timeline |
| The9 Ltd ADR |
| RLX Technology |
The9 and RLX Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The9 and RLX Technology
The main advantage of trading using opposite The9 and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The9 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.| The9 vs. Atari SA | The9 vs. Victory Square Technologies | The9 vs. Motorsport Gaming Us | The9 vs. Alpha Esports Tech |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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