Correlation Between Samsung Electronics and Ricoh

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

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

Diversification Opportunities for Samsung Electronics and Ricoh

-0.84

Correlation Coefficient

Samsung Electronics  Ricoh

Pay attention - limited upside

The 3 months correlation between Samsung and Ricoh is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Ricoh Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh and Samsung Electronics 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 Samsung Electronics Co 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 has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Ricoh go up and down completely randomly.

Pair Corralation between Samsung Electronics and Ricoh

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Ricoh. In addition to that, Samsung Electronics is 1.47 times more volatile than Ricoh Co. It trades about -0.18 of its total potential returns per unit of risk. Ricoh Co is currently generating about 0.16 per unit of volatility. If you would invest  153,550  in Ricoh Co on September 23, 2024 and sell it today you would earn a total of  24,250  from holding Ricoh Co or generate 15.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

Samsung Electronics Co  vs.  Ricoh Co

Samsung Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ricoh

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ricoh Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ricoh unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Ricoh

The main advantage of trading using opposite Samsung Electronics and Ricoh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics 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.

The idea behind Samsung Electronics Co and Ricoh Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.