Correlation Between Cogent Communications and Ricoh Company

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

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

Diversification Opportunities for Cogent Communications and Ricoh Company

-0.37

Correlation Coefficient

Cogent Communications  Ricoh Company

Very good diversification

The 3 months correlation between Cogent and Ricoh is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Ricoh Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh Company and Cogent Communications 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 Cogent Communications Holdings are associated (or correlated) with Ricoh Company. 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 Cogent Communications i.e., Cogent Communications and Ricoh Company go up and down completely randomly.

Pair Corralation between Cogent Communications and Ricoh Company

If you would invest (100.00) in Ricoh Company on December 5, 2024 and sell it today you would earn a total of  100.00  from holding Ricoh Company or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cogent Communications Holdings  vs.  Ricoh Company

Cogent Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cogent Communications Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains 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 latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Cogent Communications and Ricoh Company

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

The idea behind Cogent Communications Holdings 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.