Correlation Between CapitaLand Investment and RLX TECH

Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and RLX TECH 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 CapitaLand Investment and RLX TECH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CapitaLand Investment Limited and RLX TECH SPADR1, you can compare the effects of market volatilities on CapitaLand Investment and RLX TECH 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 CapitaLand Investment with a short position of RLX TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and RLX TECH.

Diversification Opportunities for CapitaLand Investment and RLX TECH

-0.12

Correlation Coefficient

CapitaLand Investment  RLX TECH

Good diversification

The 3 months correlation between CapitaLand and RLX is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and RLX TECH SPADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX TECH SPADR1 and CapitaLand Investment 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 CapitaLand Investment Limited are associated (or correlated) with RLX TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLX TECH SPADR1 has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and RLX TECH go up and down completely randomly.

Pair Corralation between CapitaLand Investment and RLX TECH

Assuming the 90 days horizon CapitaLand Investment is expected to generate 8.24 times less return on investment than RLX TECH. But when comparing it to its historical volatility, CapitaLand Investment Limited is 2.15 times less risky than RLX TECH. It trades about 0.02 of its potential returns per unit of risk. RLX TECH SPADR1 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  150.00  in RLX TECH SPADR1 on September 5, 2024 and sell it today you would earn a total of  26.00  from holding RLX TECH SPADR1 or generate 17.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

CapitaLand Investment Limited  vs.  RLX TECH SPADR1

CapitaLand Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CapitaLand Investment Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CapitaLand Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

RLX TECH SPADR1

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RLX TECH SPADR1 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RLX TECH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CapitaLand Investment and RLX TECH

The main advantage of trading using opposite CapitaLand Investment and RLX TECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, RLX TECH 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 TECH will offset losses from the drop in RLX TECH's long position.

The idea behind CapitaLand Investment Limited and RLX TECH SPADR1 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.