Correlation Between Jardine Matheson and ITOCHU
Can any of the company-specific risk be diversified away by investing in both Jardine Matheson 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 Jardine Matheson and ITOCHU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jardine Matheson Holdings and ITOCHU, you can compare the effects of market volatilities on Jardine Matheson 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 Jardine Matheson with a short position of ITOCHU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jardine Matheson and ITOCHU.
Diversification Opportunities for Jardine Matheson and ITOCHU
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Jardine and ITOCHU is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Jardine Matheson Holdings and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU and Jardine Matheson 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 Jardine Matheson Holdings 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 Jardine Matheson i.e., Jardine Matheson and ITOCHU go up and down completely randomly.
Pair Corralation between Jardine Matheson and ITOCHU
Assuming the 90 days horizon Jardine Matheson Holdings is expected to under-perform the ITOCHU. In addition to that, Jardine Matheson is 1.14 times more volatile than ITOCHU. It trades about -0.17 of its total potential returns per unit of risk. ITOCHU is currently generating about 0.01 per unit of volatility. If you would invest 4,606 in ITOCHU on January 13, 2025 and sell it today you would lose (6.00) from holding ITOCHU or give up 0.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jardine Matheson Holdings vs. ITOCHU
Performance |
| Timeline |
| Jardine Matheson Holdings |
| ITOCHU |
Jardine Matheson and ITOCHU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jardine Matheson and ITOCHU
The main advantage of trading using opposite Jardine Matheson and ITOCHU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jardine Matheson 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.| Jardine Matheson vs. Grupo Bimbo SAB | Jardine Matheson vs. Grupo Financiero Inbursa | Jardine Matheson vs. Arca Continental SAB | Jardine Matheson vs. Becle SA de |
| ITOCHU vs. Sumitomo Corp ADR | ITOCHU vs. Mitsui Co | ITOCHU vs. Marubeni Corp ADR | ITOCHU vs. Mitsubishi Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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