Correlation Between PT Bank and Ricoh

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

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

Diversification Opportunities for PT Bank and Ricoh

0.61

Correlation Coefficient

PT Bank  Ricoh

Poor diversification

The 3 months correlation between BZG2 and Ricoh is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Ricoh Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh Company and PT Bank 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 PT Bank Central are associated (or correlated) with Ricoh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ricoh Company has no effect on the direction of PT Bank i.e., PT Bank and Ricoh go up and down completely randomly.

Pair Corralation between PT Bank and Ricoh

Assuming the 90 days trading horizon PT Bank Central is expected to under-perform the Ricoh. In addition to that, PT Bank is 2.23 times more volatile than Ricoh Company. It trades about -0.08 of its total potential returns per unit of risk. Ricoh Company is currently generating about -0.04 per unit of volatility. If you would invest  1,090  in Ricoh Company on December 28, 2024 and sell it today you would lose (70.00) from holding Ricoh Company or give up 6.42% of portfolio value over 90 days.

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

PT Bank Central  vs.  Ricoh Company

PT Bank Central

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank Central has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ricoh Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ricoh Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Ricoh is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Bank and Ricoh

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

The idea behind PT Bank Central and Ricoh Company 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.