Correlation Between Raytech Holding and ELF Beauty

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

By analyzing existing cross correlation between Raytech Holding Limited and ELF Beauty, you can compare the effects of market volatilities on Raytech Holding and ELF Beauty 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 Raytech Holding with a short position of ELF Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytech Holding and ELF Beauty.

Diversification Opportunities for Raytech Holding and ELF Beauty

-0.32

Correlation Coefficient

Raytech Holding  ELF Beauty

Very good diversification

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

Pair Corralation between Raytech Holding and ELF Beauty

Considering the 90-day investment horizon Raytech Holding is expected to generate 1.18 times less return on investment than ELF Beauty. In addition to that, Raytech Holding is 2.77 times more volatile than ELF Beauty. It trades about 0.08 of its total potential returns per unit of risk. ELF Beauty is currently generating about 0.27 per unit of volatility. If you would invest  6,217  in ELF Beauty on April 29, 2025 and sell it today you would earn a total of  5,878  from holding ELF Beauty or generate 94.55% return on investment over 90 days.

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

Raytech Holding Limited  vs.  ELF Beauty

Raytech Holding

Risk-Adjusted Performance

Modest

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

ELF Beauty

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ELF Beauty are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, ELF Beauty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Raytech Holding and ELF Beauty

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

The idea behind Raytech Holding Limited and ELF Beauty 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.