Correlation Between RLX Technology and Imperial Brands
Can any of the company-specific risk be diversified away by investing in both RLX Technology and Imperial Brands 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 Imperial Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLX Technology and Imperial Brands PLC, you can compare the effects of market volatilities on RLX Technology and Imperial Brands 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 Imperial Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLX Technology and Imperial Brands.
Diversification Opportunities for RLX Technology and Imperial Brands
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between RLX and Imperial is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding RLX Technology and Imperial Brands PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Brands PLC 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 Imperial Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Brands PLC has no effect on the direction of RLX Technology i.e., RLX Technology and Imperial Brands go up and down completely randomly.
Pair Corralation between RLX Technology and Imperial Brands
Considering the 90-day investment horizon RLX Technology is expected to generate 0.89 times more return on investment than Imperial Brands. However, RLX Technology is 1.12 times less risky than Imperial Brands. It trades about 0.15 of its potential returns per unit of risk. Imperial Brands PLC is currently generating about 0.07 per unit of risk. 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 | 100.0% |
| Values | Daily Returns |
RLX Technology vs. Imperial Brands PLC
Performance |
| Timeline |
| RLX Technology |
| Imperial Brands PLC |
RLX Technology and Imperial Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLX Technology and Imperial Brands
The main advantage of trading using opposite RLX Technology and Imperial Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLX Technology position performs unexpectedly, Imperial Brands 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 Imperial Brands will offset losses from the drop in Imperial Brands' long position.| RLX Technology vs. Bellring Brands LLC | RLX Technology vs. Ingredion Incorporated | RLX Technology vs. Nomad Foods | RLX Technology vs. Simply Good Foods |
| Imperial Brands vs. Imperial Brands PLC | Imperial Brands vs. RLX Technology | Imperial Brands vs. British American Tobacco | Imperial Brands 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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