Correlation Between Stepstone and RLX Technology
Can any of the company-specific risk be diversified away by investing in both Stepstone and RLX Technology 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 Stepstone and RLX Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and RLX Technology, you can compare the effects of market volatilities on Stepstone and RLX Technology 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 Stepstone with a short position of RLX Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and RLX Technology.
Diversification Opportunities for Stepstone and RLX Technology
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stepstone and RLX is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and Stepstone 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 Stepstone Group are associated (or correlated) with RLX Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLX Technology has no effect on the direction of Stepstone i.e., Stepstone and RLX Technology go up and down completely randomly.
Pair Corralation between Stepstone and RLX Technology
Given the investment horizon of 90 days Stepstone Group is expected to under-perform the RLX Technology. But the stock apears to be less risky and, when comparing its historical volatility, Stepstone Group is 1.31 times less risky than RLX Technology. The stock trades about -0.11 of its potential returns per unit of risk. The RLX Technology is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 212.00 in RLX Technology on November 28, 2024 and sell it today you would earn a total of 23.00 from holding RLX Technology or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. RLX Technology
Performance |
| Timeline |
| Stepstone Group |
| RLX Technology |
Stepstone and RLX Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and RLX Technology
The main advantage of trading using opposite Stepstone and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, RLX Technology 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 RLX Technology will offset losses from the drop in RLX Technology's long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| RLX Technology vs. Green Globe International | RLX Technology vs. Kaival Brands Innovations | RLX Technology vs. Greenlane Holdings | RLX Technology vs. 22nd Century 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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