Correlation Between Mitsui and ITOCHU
Can any of the company-specific risk be diversified away by investing in both Mitsui 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 Mitsui and ITOCHU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Company and ITOCHU, you can compare the effects of market volatilities on Mitsui 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 Mitsui with a short position of ITOCHU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui and ITOCHU.
Diversification Opportunities for Mitsui and ITOCHU
Pay attention - limited upside
The 3 months correlation between Mitsui and ITOCHU is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Company and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU and Mitsui 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 Mitsui Company 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 Mitsui i.e., Mitsui and ITOCHU go up and down completely randomly.
Pair Corralation between Mitsui and ITOCHU
If you would invest (100.00) in Mitsui Company on November 10, 2024 and sell it today you would earn a total of 100.00 from holding Mitsui Company or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Mitsui Company vs. ITOCHU
Performance |
| Timeline |
| Mitsui Company |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| ITOCHU |
Mitsui and ITOCHU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui and ITOCHU
The main advantage of trading using opposite Mitsui and ITOCHU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui 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 Mitsui Company 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.| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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