Correlation Between FirstGroup PLC and Ricoh

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

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

Diversification Opportunities for FirstGroup PLC and Ricoh

-0.78

Correlation Coefficient

FirstGroup PLC  Ricoh

Pay attention - limited upside

The 3 months correlation between FirstGroup and Ricoh is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding FirstGroup PLC and Ricoh Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh and FirstGroup PLC 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 FirstGroup PLC 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 FirstGroup PLC i.e., FirstGroup PLC and Ricoh go up and down completely randomly.

Pair Corralation between FirstGroup PLC and Ricoh

Assuming the 90 days trading horizon FirstGroup PLC is expected to generate 1.28 times more return on investment than Ricoh. However, FirstGroup PLC is 1.28 times more volatile than Ricoh Co. It trades about 0.27 of its potential returns per unit of risk. Ricoh Co is currently generating about -0.1 per unit of risk. If you would invest  16,113  in FirstGroup PLC on April 24, 2025 and sell it today you would earn a total of  5,827  from holding FirstGroup PLC or generate 36.16% return on investment over 90 days.

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

FirstGroup PLC  vs.  Ricoh Co

FirstGroup PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FirstGroup PLC are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, FirstGroup PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ricoh

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ricoh Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with FirstGroup PLC and Ricoh

The main advantage of trading using opposite FirstGroup PLC and Ricoh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstGroup PLC 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 FirstGroup PLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.