Correlation Between ASM Pacific and Ricoh Company

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

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

Diversification Opportunities for ASM Pacific and Ricoh Company

-0.35

Correlation Coefficient

ASM Pacific  Ricoh Company

Very good diversification

The 3 months correlation between ASM and Ricoh is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ASM Pacific Technology and Ricoh Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh Company and ASM Pacific 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 ASM Pacific Technology 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 ASM Pacific i.e., ASM Pacific and Ricoh Company go up and down completely randomly.

Pair Corralation between ASM Pacific and Ricoh Company

Assuming the 90 days trading horizon ASM Pacific Technology is expected to generate 1.33 times more return on investment than Ricoh Company. However, ASM Pacific is 1.33 times more volatile than Ricoh Company. It trades about 0.12 of its potential returns per unit of risk. Ricoh Company is currently generating about -0.15 per unit of risk. If you would invest  579.00  in ASM Pacific Technology on April 24, 2025 and sell it today you would earn a total of  96.00  from holding ASM Pacific Technology or generate 16.58% return on investment over 90 days.

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

ASM Pacific Technology  vs.  Ricoh Company

ASM Pacific Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASM Pacific Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ASM Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

Ricoh Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ricoh Company 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 August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ASM Pacific and Ricoh Company

The main advantage of trading using opposite ASM Pacific and Ricoh Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASM Pacific 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 ASM Pacific Technology 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.