Correlation Between RLX Technology and British American
Can any of the company-specific risk be diversified away by investing in both RLX Technology and British American 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 RLX Technology and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLX Technology and British American Tobacco, you can compare the effects of market volatilities on RLX Technology and British American 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 RLX Technology with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLX Technology and British American.
Diversification Opportunities for RLX Technology and British American
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RLX and British is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding RLX Technology and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and RLX Technology 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 RLX Technology are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of RLX Technology i.e., RLX Technology and British American go up and down completely randomly.
Pair Corralation between RLX Technology and British American
Considering the 90-day investment horizon RLX Technology is expected to generate 1.05 times less return on investment than British American. In addition to that, RLX Technology is 1.3 times more volatile than British American Tobacco. It trades about 0.15 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.2 per unit of volatility. If you would invest 3,421 in British American Tobacco on August 28, 2024 and sell it today you would earn a total of 285.00 from holding British American Tobacco or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLX Technology vs. British American Tobacco
Performance |
| Timeline |
| RLX Technology |
| British American Tobacco |
RLX Technology and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLX Technology and British American
The main advantage of trading using opposite RLX Technology and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLX Technology position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| RLX Technology vs. Bellring Brands LLC | RLX Technology vs. Ingredion Incorporated | RLX Technology vs. Nomad Foods | RLX Technology vs. Simply Good Foods |
| British American vs. Imperial Brands PLC | British American vs. RLX Technology | British American vs. British American Tobacco | British American vs. Turning Point Brands |
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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