Correlation Between RLX Technology and Dow Jones
Can any of the company-specific risk be diversified away by investing in both RLX Technology and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLX Technology and Dow Jones Industrial, you can compare the effects of market volatilities on RLX Technology and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLX Technology and Dow Jones.
Diversification Opportunities for RLX Technology and Dow Jones
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between RLX and Dow is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding RLX Technology and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of RLX Technology i.e., RLX Technology and Dow Jones go up and down completely randomly.
Pair Corralation between RLX Technology and Dow Jones
Considering the 90-day investment horizon RLX Technology is expected to generate 2.8 times more return on investment than Dow Jones. However, RLX Technology is 2.8 times more volatile than Dow Jones Industrial. It trades about 0.19 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 160.00 in RLX Technology on August 24, 2024 and sell it today you would earn a total of 18.00 from holding RLX Technology or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLX Technology vs. Dow Jones Industrial
Performance |
| Timeline |
RLX Technology and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
RLX Technology
Pair trading matchups for RLX Technology
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with RLX Technology and Dow Jones
The main advantage of trading using opposite RLX Technology and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLX Technology position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| RLX Technology vs. Universal | RLX Technology vs. Imperial Brands PLC | RLX Technology vs. British American Tobacco | RLX Technology vs. Philip Morris International |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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