Correlation Between Power Metal and Ricoh

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

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

Diversification Opportunities for Power Metal and Ricoh

-0.29

Correlation Coefficient

Power Metal  Ricoh

Very good diversification

The 3 months correlation between Power and Ricoh is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources and Ricoh Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricoh and Power Metal 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 Power Metal Resources 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 Power Metal i.e., Power Metal and Ricoh go up and down completely randomly.

Pair Corralation between Power Metal and Ricoh

Assuming the 90 days trading horizon Power Metal Resources is expected to generate 2.13 times more return on investment than Ricoh. However, Power Metal is 2.13 times more volatile than Ricoh Co. It trades about 0.06 of its potential returns per unit of risk. Ricoh Co is currently generating about -0.1 per unit of risk. If you would invest  1,250  in Power Metal Resources on April 24, 2025 and sell it today you would earn a total of  125.00  from holding Power Metal Resources or generate 10.0% return on investment over 90 days.

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

Power Metal Resources  vs.  Ricoh Co

Power Metal Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Power Metal Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Power Metal 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 uncertain 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 Power Metal and Ricoh

The main advantage of trading using opposite Power Metal and Ricoh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metal 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 Power Metal Resources 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.