Correlation Between Marubeni Corp and Jardine Cycle

Can any of the company-specific risk be diversified away by investing in both Marubeni Corp and Jardine Cycle 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 Jardine Cycle 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 Jardine Cycle Carriage, you can compare the effects of market volatilities on Marubeni Corp and Jardine Cycle 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 Jardine Cycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marubeni Corp and Jardine Cycle.

Diversification Opportunities for Marubeni Corp and Jardine Cycle

0.48

Correlation Coefficient

Marubeni Corp  Jardine Cycle

Very weak diversification

The 3 months correlation between Marubeni and Jardine is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Marubeni Corp ADR and Jardine Cycle Carriage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Cycle Carriage 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 Jardine Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Cycle Carriage has no effect on the direction of Marubeni Corp i.e., Marubeni Corp and Jardine Cycle go up and down completely randomly.

Pair Corralation between Marubeni Corp and Jardine Cycle

Assuming the 90 days horizon Marubeni Corp ADR is expected to generate 0.61 times more return on investment than Jardine Cycle. However, Marubeni Corp ADR is 1.65 times less risky than Jardine Cycle. It trades about 0.04 of its potential returns per unit of risk. Jardine Cycle Carriage is currently generating about 0.0 per unit of risk. If you would invest  11,533  in Marubeni Corp ADR on September 3, 2024 and sell it today you would earn a total of  3,487  from holding Marubeni Corp ADR or generate 30.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	58.79%
Values	Daily Returns

Marubeni Corp ADR  vs.  Jardine Cycle Carriage

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 fragile 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.

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 fragile 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.

Pair Trading with Marubeni Corp and Jardine Cycle

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

The idea behind Marubeni Corp ADR and Jardine Cycle Carriage 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.