Correlation Between Richtech Robotics and Regal Beloit

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

Diversification Opportunities for Richtech Robotics and Regal Beloit

-0.65

Correlation Coefficient

Richtech Robotics  Regal Beloit

Excellent diversification

The 3 months correlation between Richtech and Regal is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Richtech Robotics Class and Regal Beloit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Beloit 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 Regal Beloit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Beloit has no effect on the direction of Richtech Robotics i.e., Richtech Robotics and Regal Beloit go up and down completely randomly.

Pair Corralation between Richtech Robotics and Regal Beloit

Allowing for the 90-day total investment horizon Richtech Robotics Class is expected to under-perform the Regal Beloit. In addition to that, Richtech Robotics is 2.94 times more volatile than Regal Beloit. It trades about -0.09 of its total potential returns per unit of risk. Regal Beloit is currently generating about 0.08 per unit of volatility. If you would invest  15,641  in Regal Beloit on September 2, 2024 and sell it today you would earn a total of  1,630  from holding Regal Beloit or generate 10.42% 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.  Regal Beloit

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.

Regal Beloit

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Beloit are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Regal Beloit may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Richtech Robotics and Regal Beloit

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

The idea behind Richtech Robotics Class and Regal Beloit 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.