Correlation Between Richtech Robotics and Generac Holdings

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

Diversification Opportunities for Richtech Robotics and Generac Holdings

-0.67

Correlation Coefficient

Richtech Robotics  Generac Holdings

Excellent diversification

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

Pair Corralation between Richtech Robotics and Generac Holdings

Allowing for the 90-day total investment horizon Richtech Robotics Class is expected to under-perform the Generac Holdings. In addition to that, Richtech Robotics is 3.95 times more volatile than Generac Holdings. It trades about -0.1 of its total potential returns per unit of risk. Generac Holdings is currently generating about -0.13 per unit of volatility. If you would invest  14,919  in Generac Holdings on November 29, 2024 and sell it today you would lose (1,005) from holding Generac Holdings or give up 6.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Richtech Robotics Class  vs.  Generac Holdings

Richtech Robotics Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Richtech Robotics Class are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Richtech Robotics reported solid returns over the last few months and may actually be approaching a breakup point.

Generac Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Generac Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Richtech Robotics and Generac Holdings

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

The idea behind Richtech Robotics Class and Generac Holdings 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.