Correlation Between RLX Technology and KLA Tencor

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

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

Diversification Opportunities for RLX Technology and KLA Tencor

0.32

Correlation Coefficient

RLX Technology  KLA Tencor

Weak diversification

The 3 months correlation between RLX and KLA is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding RLX Technology and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor 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 KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of RLX Technology i.e., RLX Technology and KLA Tencor go up and down completely randomly.

Pair Corralation between RLX Technology and KLA Tencor

Considering the 90-day investment horizon RLX Technology is expected to under-perform the KLA Tencor. But the stock apears to be less risky and, when comparing its historical volatility, RLX Technology is 1.4 times less risky than KLA Tencor. The stock trades about -0.05 of its potential returns per unit of risk. The KLA Tencor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  70,958  in KLA Tencor on March 7, 2025 and sell it today you would earn a total of  7,251  from holding KLA Tencor or generate 10.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

RLX Technology  vs.  KLA Tencor

RLX Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days RLX Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

KLA Tencor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KLA Tencor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, KLA Tencor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RLX Technology and KLA Tencor

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

The idea behind RLX Technology and KLA Tencor 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 Transaction History module to view history of all your transactions and understand their impact on performance.