Correlation Between Richtech Robotics and Graco

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

Diversification Opportunities for Richtech Robotics and Graco

-0.2

Correlation Coefficient

Richtech Robotics  Graco

Good diversification

The 3 months correlation between Richtech and Graco is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Richtech Robotics Class and Graco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graco Inc 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 Graco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graco Inc has no effect on the direction of Richtech Robotics i.e., Richtech Robotics and Graco go up and down completely randomly.

Pair Corralation between Richtech Robotics and Graco

Allowing for the 90-day total investment horizon Richtech Robotics Class is expected to generate 11.81 times more return on investment than Graco. However, Richtech Robotics is 11.81 times more volatile than Graco Inc. It trades about 0.01 of its potential returns per unit of risk. Graco Inc is currently generating about 0.02 per unit of risk. If you would invest  349.00  in Richtech Robotics Class on December 28, 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Richtech Robotics Class  vs.  Graco Inc

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.

Graco Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graco Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Richtech Robotics and Graco

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

The idea behind Richtech Robotics Class and Graco Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.