Correlation Between Konica Minolta and Ricoh

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

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

Diversification Opportunities for Konica Minolta and Ricoh

0.37

Correlation Coefficient

Konica Minolta  Ricoh

Weak diversification

The 3 months correlation between Konica and Ricoh is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Konica Minolta and Ricoh Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh Company and Konica Minolta 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 Konica Minolta 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 Konica Minolta i.e., Konica Minolta and Ricoh go up and down completely randomly.

Pair Corralation between Konica Minolta and Ricoh

Assuming the 90 days horizon Konica Minolta is expected to generate 0.94 times more return on investment than Ricoh. However, Konica Minolta is 1.07 times less risky than Ricoh. It trades about 0.32 of its potential returns per unit of risk. Ricoh Company is currently generating about 0.09 per unit of risk. If you would invest  562.00  in Konica Minolta on September 18, 2024 and sell it today you would earn a total of  357.00  from holding Konica Minolta or generate 63.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	77.78%
Values	Daily Returns

Konica Minolta  vs.  Ricoh Company

Konica Minolta

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Konica Minolta are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Konica Minolta showed solid returns over the last few months and may actually be approaching a breakup point.

Ricoh Company

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ricoh Company are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Ricoh showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Konica Minolta and Ricoh

The main advantage of trading using opposite Konica Minolta and Ricoh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Konica Minolta 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 Konica Minolta 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.

Check out your portfolio center.

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.