Correlation Between Graco and Richtech Robotics

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

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

Diversification Opportunities for Graco and Richtech Robotics

-0.15

Correlation Coefficient

Graco  Richtech Robotics

Good diversification

The 3 months correlation between Graco and Richtech is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc 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 Graco 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 Graco Inc 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 Graco i.e., Graco and Richtech Robotics go up and down completely randomly.

Pair Corralation between Graco and Richtech Robotics

Considering the 90-day investment horizon Graco Inc is expected to under-perform the Richtech Robotics. But the stock apears to be less risky and, when comparing its historical volatility, Graco Inc is 6.62 times less risky than Richtech Robotics. The stock trades about 0.0 of its potential returns per unit of risk. The Richtech Robotics Class is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  79.00  in Richtech Robotics Class on September 24, 2024 and sell it today you would earn a total of  48.00  from holding Richtech Robotics Class or generate 60.76% return on investment over 90 days.

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

Graco Inc  vs.  Richtech Robotics Class

Graco Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graco Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Graco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Richtech Robotics Class

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Richtech Robotics Class are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Richtech Robotics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graco and Richtech Robotics

The main advantage of trading using opposite Graco and Richtech Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco 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 Graco Inc 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .