Correlation Between Ricoh and GlobalData PLC

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

By analyzing existing cross correlation between Ricoh Co and GlobalData PLC, you can compare the effects of market volatilities on Ricoh and GlobalData PLC 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 GlobalData PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ricoh and GlobalData PLC.

Diversification Opportunities for Ricoh and GlobalData PLC

-0.42

Correlation Coefficient

Ricoh  GlobalData PLC

Very good diversification

The 3 months correlation between Ricoh and GlobalData is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ricoh Co and GlobalData PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalData PLC 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 GlobalData PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalData PLC has no effect on the direction of Ricoh i.e., Ricoh and GlobalData PLC go up and down completely randomly.

Pair Corralation between Ricoh and GlobalData PLC

Assuming the 90 days trading horizon Ricoh Co is expected to generate 0.83 times more return on investment than GlobalData PLC. However, Ricoh Co is 1.2 times less risky than GlobalData PLC. It trades about 0.0 of its potential returns per unit of risk. GlobalData PLC is currently generating about -0.05 per unit of risk. If you would invest  169,700  in Ricoh Co on November 20, 2024 and sell it today you would lose (400.00) from holding Ricoh Co or give up 0.24% of portfolio value over 90 days.

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

Ricoh Co  vs.  GlobalData PLC

Ricoh

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ricoh Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ricoh is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GlobalData PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GlobalData PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GlobalData PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ricoh and GlobalData PLC

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

The idea behind Ricoh Co and GlobalData PLC 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.