Correlation Between Richtech Robotics and Babcock Wilcox

Can any of the company-specific risk be diversified away by investing in both Richtech Robotics and Babcock Wilcox 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 Babcock Wilcox 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 Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Richtech Robotics and Babcock Wilcox 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 Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richtech Robotics and Babcock Wilcox.

Diversification Opportunities for Richtech Robotics and Babcock Wilcox

-0.67

Correlation Coefficient

Richtech Robotics  Babcock Wilcox

Excellent diversification

The 3 months correlation between Richtech and Babcock is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Richtech Robotics Class and Babcock Wilcox Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock Wilcox Enter 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 Babcock Wilcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock Wilcox Enter has no effect on the direction of Richtech Robotics i.e., Richtech Robotics and Babcock Wilcox go up and down completely randomly.

Pair Corralation between Richtech Robotics and Babcock Wilcox

Allowing for the 90-day total investment horizon Richtech Robotics Class is expected to generate 3.82 times more return on investment than Babcock Wilcox. However, Richtech Robotics is 3.82 times more volatile than Babcock Wilcox Enterprises. It trades about 0.23 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.15 per unit of risk. If you would invest  57.00  in Richtech Robotics Class on November 19, 2024 and sell it today you would earn a total of  218.00  from holding Richtech Robotics Class or generate 382.46% return on investment over 90 days.

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

Richtech Robotics Class  vs.  Babcock Wilcox Enterprises

Richtech Robotics Class

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Richtech Robotics Class are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Richtech Robotics reported solid returns over the last few months and may actually be approaching a breakup point.

Babcock Wilcox Enter

Risk-Adjusted Performance

Very Weak

Over the last 90 days Babcock Wilcox Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Richtech Robotics and Babcock Wilcox

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

The idea behind Richtech Robotics Class and Babcock Wilcox Enterprises 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.