Correlation Between Greenlane Holdings and RLX Technology

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

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

Diversification Opportunities for Greenlane Holdings and RLX Technology

-0.09

Correlation Coefficient

Greenlane Holdings  RLX Technology

Good diversification

The 3 months correlation between Greenlane and RLX is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Greenlane Holdings and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology and Greenlane Holdings 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 Greenlane Holdings 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 Greenlane Holdings i.e., Greenlane Holdings and RLX Technology go up and down completely randomly.

Pair Corralation between Greenlane Holdings and RLX Technology

Given the investment horizon of 90 days Greenlane Holdings is expected to generate 5.16 times more return on investment than RLX Technology. However, Greenlane Holdings is 5.16 times more volatile than RLX Technology. It trades about 0.01 of its potential returns per unit of risk. RLX Technology is currently generating about 0.0 per unit of risk. If you would invest  5,357  in Greenlane Holdings on August 31, 2024 and sell it today you would lose (5,174) from holding Greenlane Holdings or give up 96.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Greenlane Holdings  vs.  RLX Technology

Greenlane Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenlane Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

RLX Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RLX Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent essential indicators, RLX Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greenlane Holdings and RLX Technology

The main advantage of trading using opposite Greenlane Holdings and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greenlane Holdings 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.

The idea behind Greenlane Holdings and RLX Technology 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.