Correlation Between Laser Photonics and Richtech Robotics

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

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

Diversification Opportunities for Laser Photonics and Richtech Robotics

0.24

Correlation Coefficient

Laser Photonics  Richtech Robotics

Modest diversification

The 3 months correlation between Laser and Richtech is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Laser Photonics 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 Laser Photonics 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 Laser Photonics 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 Laser Photonics i.e., Laser Photonics and Richtech Robotics go up and down completely randomly.

Pair Corralation between Laser Photonics and Richtech Robotics

Given the investment horizon of 90 days Laser Photonics is expected to under-perform the Richtech Robotics. But the stock apears to be less risky and, when comparing its historical volatility, Laser Photonics is 1.4 times less risky than Richtech Robotics. The stock trades about -0.02 of its potential returns per unit of risk. The Richtech Robotics Class is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Richtech Robotics Class on September 10, 2024 and sell it today you would earn a total of  17.00  from holding Richtech Robotics Class or generate 26.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Laser Photonics  vs.  Richtech Robotics Class

Laser Photonics

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Laser Photonics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Laser Photonics exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Laser Photonics and Richtech Robotics

The main advantage of trading using opposite Laser Photonics and Richtech Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laser Photonics 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 Laser Photonics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.