Correlation Between Itochu Corp and Toshiba

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

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

Diversification Opportunities for Itochu Corp and Toshiba

0.0

Correlation Coefficient

Itochu Corp  Toshiba

Pay attention - limited upside

The 3 months correlation between Itochu and Toshiba is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Itochu Corp ADR and Toshiba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toshiba and Itochu Corp 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 Itochu Corp ADR are associated (or correlated) with Toshiba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toshiba has no effect on the direction of Itochu Corp i.e., Itochu Corp and Toshiba go up and down completely randomly.

Pair Corralation between Itochu Corp and Toshiba

If you would invest (100.00) in Toshiba on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Toshiba or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Itochu Corp ADR  vs.  Toshiba

Itochu Corp ADR

Risk-Adjusted Performance

Very Weak

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

Toshiba

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Itochu Corp and Toshiba

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

The idea behind Itochu Corp ADR and Toshiba 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.