Correlation Between Jardine Cycle and Marubeni

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

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

Diversification Opportunities for Jardine Cycle and Marubeni

0.03

Correlation Coefficient

Jardine Cycle  Marubeni

Significant diversification

The 3 months correlation between Jardine and Marubeni is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Jardine Cycle Carriage and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni and Jardine Cycle 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 Jardine Cycle Carriage are associated (or correlated) with Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of Jardine Cycle i.e., Jardine Cycle and Marubeni go up and down completely randomly.

Pair Corralation between Jardine Cycle and Marubeni

Assuming the 90 days horizon Jardine Cycle Carriage is expected to under-perform the Marubeni. But the pink sheet apears to be less risky and, when comparing its historical volatility, Jardine Cycle Carriage is 1.81 times less risky than Marubeni. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Marubeni is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,427  in Marubeni on September 1, 2024 and sell it today you would earn a total of  173.00  from holding Marubeni or generate 12.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Jardine Cycle Carriage  vs.  Marubeni

Jardine Cycle Carriage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jardine Cycle Carriage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Marubeni

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marubeni are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Marubeni is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Jardine Cycle and Marubeni

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

The idea behind Jardine Cycle Carriage and Marubeni 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.