Correlation Between Seaboard and ITOCHU

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

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

Diversification Opportunities for Seaboard and ITOCHU

-0.15

Correlation Coefficient

Seaboard  ITOCHU

Good diversification

The 3 months correlation between Seaboard and ITOCHU is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Seaboard and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU and Seaboard 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 Seaboard 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 Seaboard i.e., Seaboard and ITOCHU go up and down completely randomly.

Pair Corralation between Seaboard and ITOCHU

Assuming the 90 days horizon Seaboard is expected to generate 1.03 times more return on investment than ITOCHU. However, Seaboard is 1.03 times more volatile than ITOCHU. It trades about 0.04 of its potential returns per unit of risk. ITOCHU is currently generating about -0.49 per unit of risk. If you would invest  232,000  in Seaboard on October 25, 2024 and sell it today you would earn a total of  2,000  from holding Seaboard or generate 0.86% return on investment over 90 days.

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

Seaboard  vs.  ITOCHU

Seaboard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seaboard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 basic 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 Seaboard and ITOCHU

The main advantage of trading using opposite Seaboard and ITOCHU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seaboard 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 Seaboard 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.