Correlation Between RLX Technology and ServiceNow
Can any of the company-specific risk be diversified away by investing in both RLX Technology and ServiceNow 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 ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLX Technology and ServiceNow, you can compare the effects of market volatilities on RLX Technology and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLX Technology and ServiceNow.
Diversification Opportunities for RLX Technology and ServiceNow
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between RLX and ServiceNow is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding RLX Technology and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of RLX Technology i.e., RLX Technology and ServiceNow go up and down completely randomly.
Pair Corralation between RLX Technology and ServiceNow
Considering the 90-day investment horizon RLX Technology is expected to generate 24.91 times less return on investment than ServiceNow. In addition to that, RLX Technology is 1.74 times more volatile than ServiceNow. It trades about 0.0 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.12 per unit of volatility. If you would invest 37,856 in ServiceNow on August 31, 2024 and sell it today you would earn a total of 67,088 from holding ServiceNow or generate 177.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLX Technology vs. ServiceNow
Performance |
| Timeline |
| RLX Technology |
| ServiceNow |
RLX Technology and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLX Technology and ServiceNow
The main advantage of trading using opposite RLX Technology and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLX Technology position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow's long position.| RLX Technology vs. Green Globe International | RLX Technology vs. Kaival Brands Innovations | RLX Technology vs. Greenlane Holdings | RLX Technology vs. 22nd Century Group |
| ServiceNow vs. Autodesk | ServiceNow vs. Intuit Inc | ServiceNow vs. Zoom Video Communications | ServiceNow vs. Snowflake |
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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