Correlation Between Future Metals and Ricoh

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

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

Diversification Opportunities for Future Metals and Ricoh

-0.72

Correlation Coefficient

Future Metals  Ricoh

Pay attention - limited upside

The 3 months correlation between Future and Ricoh is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL and Ricoh Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh and Future Metals 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 Future Metals NL 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 Future Metals i.e., Future Metals and Ricoh go up and down completely randomly.

Pair Corralation between Future Metals and Ricoh

Assuming the 90 days trading horizon Future Metals NL is expected to generate 2.57 times more return on investment than Ricoh. However, Future Metals is 2.57 times more volatile than Ricoh Co. It trades about 0.08 of its potential returns per unit of risk. Ricoh Co is currently generating about -0.1 per unit of risk. If you would invest  65.00  in Future Metals NL on April 21, 2025 and sell it today you would earn a total of  20.00  from holding Future Metals NL or generate 30.77% return on investment over 90 days.

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

Future Metals NL  vs.  Ricoh Co

Future Metals NL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Future Metals NL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Future Metals 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 Future Metals and Ricoh

The main advantage of trading using opposite Future Metals and Ricoh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Metals 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 Future Metals NL 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.