Correlation Between Media and Ricoh

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

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

Diversification Opportunities for Media and Ricoh

-0.34

Correlation Coefficient

Media  Ricoh

Very good diversification

The 3 months correlation between Media and Ricoh is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Ricoh Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh Company and 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 Media and Games 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 Media i.e., Media and Ricoh go up and down completely randomly.

Pair Corralation between Media and Ricoh

Assuming the 90 days trading horizon Media and Games is expected to under-perform the Ricoh. In addition to that, Media is 2.32 times more volatile than Ricoh Company. It trades about -0.15 of its total potential returns per unit of risk. Ricoh Company is currently generating about -0.02 per unit of volatility. If you would invest  1,070  in Ricoh Company on October 26, 2024 and sell it today you would lose (20.00) from holding Ricoh Company or give up 1.87% of portfolio value over 90 days.

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

Media and Games  vs.  Ricoh Company

Media and Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Media and Games 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ricoh Company

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ricoh Company are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Ricoh may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Media and Ricoh

The main advantage of trading using opposite Media and Ricoh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 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 Media and Games 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..