Correlation Between Bayview Acquisition and Richtech Robotics

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

By analyzing existing cross correlation between Bayview Acquisition Corp and Richtech Robotics Class, you can compare the effects of market volatilities on Bayview Acquisition and Richtech Robotics 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 Bayview Acquisition with a short position of Richtech Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayview Acquisition and Richtech Robotics.

Diversification Opportunities for Bayview Acquisition and Richtech Robotics

0.21

Correlation Coefficient

Bayview Acquisition  Richtech Robotics

Modest diversification

The 3 months correlation between Bayview and Richtech is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bayview Acquisition Corp and Richtech Robotics Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richtech Robotics Class and Bayview Acquisition 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 Bayview Acquisition Corp are associated (or correlated) with Richtech Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richtech Robotics Class has no effect on the direction of Bayview Acquisition i.e., Bayview Acquisition and Richtech Robotics go up and down completely randomly.

Pair Corralation between Bayview Acquisition and Richtech Robotics

Assuming the 90 days horizon Bayview Acquisition is expected to generate 6.26 times less return on investment than Richtech Robotics. But when comparing it to its historical volatility, Bayview Acquisition Corp is 33.64 times less risky than Richtech Robotics. It trades about 0.03 of its potential returns per unit of risk. Richtech Robotics Class is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  349.00  in Richtech Robotics Class on December 29, 2024 and sell it today you would lose (130.00) from holding Richtech Robotics Class or give up 37.25% of portfolio value over 90 days.

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

Bayview Acquisition Corp  vs.  Richtech Robotics Class

Bayview Acquisition Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bayview Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bayview Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Richtech Robotics Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Richtech Robotics Class has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Richtech Robotics is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bayview Acquisition and Richtech Robotics

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

The idea behind Bayview Acquisition Corp and Richtech Robotics Class 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.