Correlation Between Seaboard and Mitsubishi Logistics

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

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

Diversification Opportunities for Seaboard and Mitsubishi Logistics

-0.55

Correlation Coefficient

Seaboard  Mitsubishi Logistics

Excellent diversification

The 3 months correlation between Seaboard and Mitsubishi is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Seaboard and Mitsubishi Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Logistics 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 Mitsubishi Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Logistics has no effect on the direction of Seaboard i.e., Seaboard and Mitsubishi Logistics go up and down completely randomly.

Pair Corralation between Seaboard and Mitsubishi Logistics

Assuming the 90 days horizon Seaboard is expected to under-perform the Mitsubishi Logistics. But the stock apears to be less risky and, when comparing its historical volatility, Seaboard is 1.25 times less risky than Mitsubishi Logistics. The stock trades about -0.06 of its potential returns per unit of risk. The Mitsubishi Logistics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  408.00  in Mitsubishi Logistics on October 4, 2024 and sell it today you would earn a total of  292.00  from holding Mitsubishi Logistics or generate 71.57% return on investment over 90 days.

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

Seaboard  vs.  Mitsubishi Logistics

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 fragile 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.

Mitsubishi Logistics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Logistics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Mitsubishi Logistics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Seaboard and Mitsubishi Logistics

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

The idea behind Seaboard and Mitsubishi Logistics 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 Transaction History module to view history of all your transactions and understand their impact on performance.