Correlation Between Skechers USA and Richtech Robotics

Can any of the company-specific risk be diversified away by investing in both Skechers USA and Richtech Robotics 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 Skechers USA and Richtech Robotics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Skechers USA and Richtech Robotics Class, you can compare the effects of market volatilities on Skechers USA and Richtech Robotics 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 Skechers USA with a short position of Richtech Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Richtech Robotics.

Diversification Opportunities for Skechers USA and Richtech Robotics

0.56

Correlation Coefficient

Skechers USA  Richtech Robotics

Very weak diversification

The 3 months correlation between Skechers and Richtech is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Richtech Robotics Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richtech Robotics Class and Skechers USA 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 Skechers USA are associated (or correlated) with Richtech Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richtech Robotics Class has no effect on the direction of Skechers USA i.e., Skechers USA and Richtech Robotics go up and down completely randomly.

Pair Corralation between Skechers USA and Richtech Robotics

Considering the 90-day investment horizon Skechers USA is expected to generate 2.34 times less return on investment than Richtech Robotics. But when comparing it to its historical volatility, Skechers USA is 5.68 times less risky than Richtech Robotics. It trades about 0.06 of its potential returns per unit of risk. Richtech Robotics Class is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Richtech Robotics Class on September 23, 2024 and sell it today you would lose (373.00) from holding Richtech Robotics Class or give up 74.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	55.73%
Values	Daily Returns

Skechers USA  vs.  Richtech Robotics Class

Skechers USA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Skechers USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward-looking signals, Skechers USA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Richtech Robotics Class

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Richtech Robotics Class are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Richtech Robotics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Skechers USA and Richtech Robotics

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

The idea behind Skechers USA and Richtech Robotics Class 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .