Correlation Between RLX Technology and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both RLX Technology and Weibo Corp 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 Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLX Technology and Weibo Corp, you can compare the effects of market volatilities on RLX Technology and Weibo Corp 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 Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLX Technology and Weibo Corp.
Diversification Opportunities for RLX Technology and Weibo Corp
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RLX and Weibo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding RLX Technology and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp 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 Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of RLX Technology i.e., RLX Technology and Weibo Corp go up and down completely randomly.
Pair Corralation between RLX Technology and Weibo Corp
Considering the 90-day investment horizon RLX Technology is expected to generate 1.73 times less return on investment than Weibo Corp. But when comparing it to its historical volatility, RLX Technology is 1.15 times less risky than Weibo Corp. It trades about 0.03 of its potential returns per unit of risk. Weibo Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 851.00 in Weibo Corp on September 1, 2024 and sell it today you would earn a total of 109.00 from holding Weibo Corp or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLX Technology vs. Weibo Corp
Performance |
| Timeline |
| RLX Technology |
| Weibo Corp |
RLX Technology and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLX Technology and Weibo Corp
The main advantage of trading using opposite RLX Technology and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLX Technology position performs unexpectedly, Weibo Corp 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 Weibo Corp will offset losses from the drop in Weibo Corp'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 |
| Weibo Corp vs. MediaAlpha | Weibo Corp vs. Asset Entities Class | Weibo Corp vs. Shutterstock | Weibo Corp vs. Match 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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