Correlation Between Marubeni Corp and ITOCHU

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

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

Diversification Opportunities for Marubeni Corp and ITOCHU

0.43

Correlation Coefficient

Marubeni Corp  ITOCHU

Very weak diversification

The 3 months correlation between Marubeni and ITOCHU is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Marubeni Corp ADR and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU and Marubeni 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 Marubeni Corp ADR 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 Marubeni Corp i.e., Marubeni Corp and ITOCHU go up and down completely randomly.

Pair Corralation between Marubeni Corp and ITOCHU

Assuming the 90 days horizon Marubeni Corp is expected to generate 312.33 times less return on investment than ITOCHU. But when comparing it to its historical volatility, Marubeni Corp ADR is 2.66 times less risky than ITOCHU. It trades about 0.0 of its potential returns per unit of risk. ITOCHU is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,813  in ITOCHU on September 1, 2024 and sell it today you would earn a total of  287.00  from holding ITOCHU or generate 5.96% return on investment over 90 days.

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

Marubeni Corp ADR  vs.  ITOCHU

Marubeni Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marubeni Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 Marubeni Corp and ITOCHU

The main advantage of trading using opposite Marubeni Corp and ITOCHU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marubeni Corp 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 Marubeni Corp ADR 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.