Correlation Between Cibl and ITOCHU

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

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

Diversification Opportunities for Cibl and ITOCHU

-0.3

Correlation Coefficient

Cibl  ITOCHU

Very good diversification

The 3 months correlation between Cibl and ITOCHU is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cibl Inc and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU and Cibl 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 Cibl Inc are associated (or correlated) with ITOCHU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITOCHU has no effect on the direction of Cibl i.e., Cibl and ITOCHU go up and down completely randomly.

Pair Corralation between Cibl and ITOCHU

Given the investment horizon of 90 days Cibl Inc is expected to under-perform the ITOCHU. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cibl Inc is 2.17 times less risky than ITOCHU. The pink sheet trades about 0.0 of its potential returns per unit of risk. The ITOCHU is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,275  in ITOCHU on September 1, 2024 and sell it today you would lose (175.00) from holding ITOCHU or give up 3.32% of portfolio value over 90 days.

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

Cibl Inc  vs.  ITOCHU

Cibl Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cibl Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Cibl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ITOCHU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITOCHU has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, ITOCHU is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cibl and ITOCHU

The main advantage of trading using opposite Cibl and ITOCHU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cibl position performs unexpectedly, ITOCHU 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 ITOCHU will offset losses from the drop in ITOCHU's long position.

The idea behind Cibl Inc and ITOCHU 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.