Correlation Between United Internet and Ricoh Company

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

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

Diversification Opportunities for United Internet and Ricoh Company

-0.62

Correlation Coefficient

United Internet  Ricoh Company

Excellent diversification

The 3 months correlation between United and Ricoh is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Ricoh Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh Company and United Internet 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 United Internet AG 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 United Internet i.e., United Internet and Ricoh Company go up and down completely randomly.

Pair Corralation between United Internet and Ricoh Company

Assuming the 90 days trading horizon United Internet is expected to generate 5.11 times less return on investment than Ricoh Company. But when comparing it to its historical volatility, United Internet AG is 1.84 times less risky than Ricoh Company. It trades about 0.07 of its potential returns per unit of risk. Ricoh Company is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,010  in Ricoh Company on September 17, 2024 and sell it today you would earn a total of  90.00  from holding Ricoh Company or generate 8.91% return on investment over 90 days.

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

United Internet AG  vs.  Ricoh Company

United Internet AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Internet AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ricoh Company

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ricoh Company are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Ricoh Company reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Internet and Ricoh Company

The main advantage of trading using opposite United Internet and Ricoh Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet 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 United Internet AG 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.