Correlation Between Catalyst Media and Ricoh

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

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

Diversification Opportunities for Catalyst Media and Ricoh

-0.24

Correlation Coefficient

Catalyst Media  Ricoh

Very good diversification

The 3 months correlation between Catalyst and Ricoh is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Ricoh Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh and Catalyst Media 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 Catalyst Media Group 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 has no effect on the direction of Catalyst Media i.e., Catalyst Media and Ricoh go up and down completely randomly.

Pair Corralation between Catalyst Media and Ricoh

Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the Ricoh. But the stock apears to be less risky and, when comparing its historical volatility, Catalyst Media Group is 2.09 times less risky than Ricoh. The stock trades about -0.03 of its potential returns per unit of risk. The Ricoh Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  135,930  in Ricoh Co on September 26, 2024 and sell it today you would earn a total of  41,870  from holding Ricoh Co or generate 30.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Catalyst Media Group  vs.  Ricoh Co

Catalyst Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Ricoh

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ricoh Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ricoh may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Catalyst Media and Ricoh

The main advantage of trading using opposite Catalyst Media and Ricoh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media 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 Catalyst Media Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.