Correlation Between Richtech Robotics and ITT

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

Diversification Opportunities for Richtech Robotics and ITT

0.57

Correlation Coefficient

Richtech Robotics  ITT

Very weak diversification

The 3 months correlation between Richtech and ITT is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Richtech Robotics Class and ITT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITT 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 ITT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITT Inc has no effect on the direction of Richtech Robotics i.e., Richtech Robotics and ITT go up and down completely randomly.

Pair Corralation between Richtech Robotics and ITT

Allowing for the 90-day total investment horizon Richtech Robotics Class is expected to generate 8.36 times more return on investment than ITT. However, Richtech Robotics is 8.36 times more volatile than ITT Inc. It trades about 0.04 of its potential returns per unit of risk. ITT Inc is currently generating about -0.05 per unit of risk. If you would invest  290.00  in Richtech Robotics Class on December 27, 2024 and sell it today you would lose (58.00) from holding Richtech Robotics Class or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Richtech Robotics Class  vs.  ITT Inc

Richtech Robotics Class

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Richtech Robotics Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Richtech Robotics reported solid returns over the last few months and may actually be approaching a breakup point.

ITT Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ITT is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Richtech Robotics and ITT

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

The idea behind Richtech Robotics Class and ITT 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 Commodity Directory module to find actively traded commodities issued by global exchanges.