Correlation Between Ricoh and Catalyst Media

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

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

Diversification Opportunities for Ricoh and Catalyst Media

-0.16

Correlation Coefficient

Ricoh  Catalyst Media

Good diversification

The 3 months correlation between Ricoh and Catalyst is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ricoh Co and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group and Ricoh 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 Ricoh Co are associated (or correlated) with Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of Ricoh i.e., Ricoh and Catalyst Media go up and down completely randomly.

Pair Corralation between Ricoh and Catalyst Media

Assuming the 90 days trading horizon Ricoh Co is expected to generate 1.61 times more return on investment than Catalyst Media. However, Ricoh is 1.61 times more volatile than Catalyst Media Group. It trades about 0.07 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.03 per unit of risk. If you would invest  93,285  in Ricoh Co on September 25, 2024 and sell it today you would earn a total of  84,515  from holding Ricoh Co or generate 90.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.43%
Values	Daily Returns

Ricoh Co  vs.  Catalyst Media Group

Ricoh

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ricoh Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ricoh unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 rather sound technical and fundamental indicators, Catalyst Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ricoh and Catalyst Media

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

The idea behind Ricoh Co and Catalyst Media Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.