Correlation Between Marubeni Corp and Mitsui Co

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

Diversification Opportunities for Marubeni Corp and Mitsui Co

0.41

Correlation Coefficient

Marubeni Corp  Mitsui Co

Very weak diversification

The 3 months correlation between Marubeni and Mitsui is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Marubeni Corp ADR and Mitsui Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Co 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 Mitsui Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Co has no effect on the direction of Marubeni Corp i.e., Marubeni Corp and Mitsui Co go up and down completely randomly.

Pair Corralation between Marubeni Corp and Mitsui Co

Assuming the 90 days horizon Marubeni Corp ADR is expected to under-perform the Mitsui Co. But the pink sheet apears to be less risky and, when comparing its historical volatility, Marubeni Corp ADR is 2.15 times less risky than Mitsui Co. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Mitsui Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,090  in Mitsui Co on September 5, 2024 and sell it today you would earn a total of  70.00  from holding Mitsui Co or generate 3.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Marubeni Corp ADR  vs.  Mitsui Co

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.

Mitsui Co

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mitsui Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Marubeni Corp and Mitsui Co

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

The idea behind Marubeni Corp ADR and Mitsui Co 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.