Correlation Between Richtech Robotics and Astec Industries

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

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

Diversification Opportunities for Richtech Robotics and Astec Industries

-0.38

Correlation Coefficient

Richtech Robotics  Astec Industries

Very good diversification

The 3 months correlation between Richtech and Astec is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Richtech Robotics Class and Astec Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astec Industries and Richtech Robotics 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 Richtech Robotics Class are associated (or correlated) with Astec Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astec Industries has no effect on the direction of Richtech Robotics i.e., Richtech Robotics and Astec Industries go up and down completely randomly.

Pair Corralation between Richtech Robotics and Astec Industries

Allowing for the 90-day total investment horizon Richtech Robotics Class is expected to under-perform the Astec Industries. In addition to that, Richtech Robotics is 2.78 times more volatile than Astec Industries. It trades about -0.11 of its total potential returns per unit of risk. Astec Industries is currently generating about 0.14 per unit of volatility. If you would invest  3,173  in Astec Industries on September 3, 2024 and sell it today you would earn a total of  732.00  from holding Astec Industries or generate 23.07% return on investment over 90 days.

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

Richtech Robotics Class  vs.  Astec Industries

Richtech Robotics Class

Risk-Adjusted Performance

0 of 100

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 inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Astec Industries

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Astec Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Astec Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Richtech Robotics and Astec Industries

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

The idea behind Richtech Robotics Class and Astec Industries 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.