Correlation Between Teijin and Marubeni

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

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

Diversification Opportunities for Teijin and Marubeni

0.25

Correlation Coefficient

Teijin  Marubeni

Modest diversification

The 3 months correlation between Teijin and Marubeni is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Teijin and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni and Teijin 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 Teijin are associated (or correlated) with Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of Teijin i.e., Teijin and Marubeni go up and down completely randomly.

Pair Corralation between Teijin and Marubeni

Assuming the 90 days horizon Teijin is expected to generate 1.94 times less return on investment than Marubeni. But when comparing it to its historical volatility, Teijin is 2.1 times less risky than Marubeni. It trades about 0.09 of its potential returns per unit of risk. Marubeni is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,470  in Marubeni on December 30, 2024 and sell it today you would earn a total of  207.00  from holding Marubeni or generate 14.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Teijin  vs.  Marubeni

Teijin

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teijin are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Teijin may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Marubeni

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marubeni are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Marubeni reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teijin and Marubeni

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

The idea behind Teijin and Marubeni 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.