Correlation Between China Resources and Ricoh
Can any of the company-specific risk be diversified away by investing in both China Resources 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 China Resources and Ricoh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Gas and Ricoh Company, you can compare the effects of market volatilities on China Resources 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 China Resources with a short position of Ricoh. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Ricoh.
Diversification Opportunities for China Resources and Ricoh
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Ricoh is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Gas and Ricoh Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh Company and China Resources 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 China Resources Gas 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 China Resources i.e., China Resources and Ricoh go up and down completely randomly.
Pair Corralation between China Resources and Ricoh
Assuming the 90 days trading horizon China Resources Gas is expected to under-perform the Ricoh. But the stock apears to be less risky and, when comparing its historical volatility, China Resources Gas is 1.13 times less risky than Ricoh. The stock trades about -0.12 of its potential returns per unit of risk. The Ricoh Company is currently generating about 0.14 of returns per unit of risk over similar time horizon. 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 | 95.65% |
| Values | Daily Returns |
China Resources Gas vs. Ricoh Company
Performance |
| Timeline |
| China Resources Gas |
| Ricoh Company |
China Resources and Ricoh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Ricoh
The main advantage of trading using opposite China Resources and Ricoh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources 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.| China Resources vs. CenterPoint Energy | China Resources vs. Snam SpA | China Resources vs. ENN Energy Holdings | China Resources vs. Superior Plus Corp |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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