Correlation Between RLX Technology and Kenvue

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

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

Diversification Opportunities for RLX Technology and Kenvue

-0.3

Correlation Coefficient

RLX Technology  Kenvue

Very good diversification

The 3 months correlation between RLX and Kenvue is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding RLX Technology and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue Inc 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of RLX Technology i.e., RLX Technology and Kenvue go up and down completely randomly.

Pair Corralation between RLX Technology and Kenvue

Considering the 90-day investment horizon RLX Technology is expected to under-perform the Kenvue. In addition to that, RLX Technology is 1.77 times more volatile than Kenvue Inc. It trades about -0.08 of its total potential returns per unit of risk. Kenvue Inc is currently generating about 0.13 per unit of volatility. If you would invest  2,054  in Kenvue Inc on February 5, 2025 and sell it today you would earn a total of  303.00  from holding Kenvue Inc or generate 14.75% return on investment over 90 days.

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

RLX Technology  vs.  Kenvue Inc

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 inconsistent performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kenvue Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kenvue Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Kenvue exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RLX Technology and Kenvue

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

The idea behind RLX Technology and Kenvue Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.