Correlation Between Coupang and Ricoh
Can any of the company-specific risk be diversified away by investing in both Coupang 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 Coupang and Ricoh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coupang and Ricoh Company, you can compare the effects of market volatilities on Coupang 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 Coupang with a short position of Ricoh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coupang and Ricoh.
Diversification Opportunities for Coupang and Ricoh
Poor diversification
The 3 months correlation between Coupang and Ricoh is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Coupang and Ricoh Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh Company and Coupang 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 Coupang 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 Coupang i.e., Coupang and Ricoh go up and down completely randomly.
Pair Corralation between Coupang and Ricoh
Assuming the 90 days horizon Coupang is expected to generate 2.7 times less return on investment than Ricoh. In addition to that, Coupang is 1.22 times more volatile than Ricoh Company. It trades about 0.04 of its total potential returns per unit of risk. Ricoh Company is currently generating about 0.14 per unit of volatility. If you would invest 995.00 in Ricoh Company on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Ricoh Company or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coupang vs. Ricoh Company
Performance |
| Timeline |
| Coupang |
| Ricoh Company |
Coupang and Ricoh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coupang and Ricoh
The main advantage of trading using opposite Coupang and Ricoh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coupang 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.| Coupang vs. Charter Communications | Coupang vs. Ribbon Communications | Coupang vs. COMPUTERSHARE | Coupang vs. Entravision Communications |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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