Correlation Between Magnora ASA and Ricoh Co

Can any of the company-specific risk be diversified away by investing in both Magnora ASA and Ricoh Co 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 Magnora ASA and Ricoh Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Magnora ASA and Ricoh Co, you can compare the effects of market volatilities on Magnora ASA and Ricoh Co 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 Magnora ASA with a short position of Ricoh Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnora ASA and Ricoh Co.

Diversification Opportunities for Magnora ASA and Ricoh Co

0.8

Correlation Coefficient

Magnora ASA  Ricoh Co

Very poor diversification

The 3 months correlation between Magnora and Ricoh is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA and Ricoh Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh Co and Magnora ASA 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 Magnora ASA are associated (or correlated) with Ricoh Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ricoh Co has no effect on the direction of Magnora ASA i.e., Magnora ASA and Ricoh Co go up and down completely randomly.

Pair Corralation between Magnora ASA and Ricoh Co

Assuming the 90 days trading horizon Magnora ASA is expected to under-perform the Ricoh Co. In addition to that, Magnora ASA is 1.18 times more volatile than Ricoh Co. It trades about -0.11 of its total potential returns per unit of risk. Ricoh Co is currently generating about -0.08 per unit of volatility. If you would invest  177,800  in Ricoh Co on December 28, 2024 and sell it today you would lose (15,700) from holding Ricoh Co or give up 8.83% of portfolio value over 90 days.

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

Magnora ASA  vs.  Ricoh Co

Magnora ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magnora ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ricoh Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ricoh Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Magnora ASA and Ricoh Co

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

The idea behind Magnora ASA and Ricoh Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.