Correlation Between Ricoh Company and Kajima Corp
Can any of the company-specific risk be diversified away by investing in both Ricoh Company and Kajima Corp 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 Company and Kajima Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ricoh Company and Kajima Corp ADR, you can compare the effects of market volatilities on Ricoh Company and Kajima Corp 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 Company with a short position of Kajima Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ricoh Company and Kajima Corp.
Diversification Opportunities for Ricoh Company and Kajima Corp
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ricoh and Kajima is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ricoh Company and Kajima Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kajima Corp ADR and Ricoh Company 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 Company are associated (or correlated) with Kajima Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kajima Corp ADR has no effect on the direction of Ricoh Company i.e., Ricoh Company and Kajima Corp go up and down completely randomly.
Pair Corralation between Ricoh Company and Kajima Corp
Assuming the 90 days horizon Ricoh Company is expected to generate 0.68 times more return on investment than Kajima Corp. However, Ricoh Company is 1.48 times less risky than Kajima Corp. It trades about 0.05 of its potential returns per unit of risk. Kajima Corp ADR is currently generating about 0.0 per unit of risk. If you would invest 1,020 in Ricoh Company on November 2, 2024 and sell it today you would earn a total of 110.00 from holding Ricoh Company or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ricoh Company vs. Kajima Corp ADR
Performance |
| Timeline |
| Ricoh Company |
| Kajima Corp ADR |
Ricoh Company and Kajima Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ricoh Company and Kajima Corp
The main advantage of trading using opposite Ricoh Company and Kajima Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ricoh Company position performs unexpectedly, Kajima Corp 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 Kajima Corp will offset losses from the drop in Kajima Corp's long position.| Ricoh Company vs. Cavitation Techs | Ricoh Company vs. Barloworld Ltd ADR | Ricoh Company vs. Morningstar Unconstrained Allocation | Ricoh Company vs. Thrivent High Yield |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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