Correlation Between Teijin and Marubeni Corp
Can any of the company-specific risk be diversified away by investing in both Teijin and Marubeni Corp 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 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teijin and Marubeni Corp ADR, you can compare the effects of market volatilities on Teijin and Marubeni Corp 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 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teijin and Marubeni Corp.
Diversification Opportunities for Teijin and Marubeni Corp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teijin and Marubeni is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Teijin and Marubeni Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni Corp ADR 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 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni Corp ADR has no effect on the direction of Teijin i.e., Teijin and Marubeni Corp go up and down completely randomly.
Pair Corralation between Teijin and Marubeni Corp
Assuming the 90 days horizon Teijin is expected to under-perform the Marubeni Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Teijin is 1.34 times less risky than Marubeni Corp. The pink sheet trades about -0.25 of its potential returns per unit of risk. The Marubeni Corp ADR is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 15,074 in Marubeni Corp ADR on September 1, 2024 and sell it today you would lose (41.00) from holding Marubeni Corp ADR or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teijin vs. Marubeni Corp ADR
Performance |
| Timeline |
| Teijin |
| Marubeni Corp ADR |
Teijin and Marubeni Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teijin and Marubeni Corp
The main advantage of trading using opposite Teijin and Marubeni Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teijin position performs unexpectedly, Marubeni Corp 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 Corp will offset losses from the drop in Marubeni Corp's long position.The idea behind Teijin and Marubeni Corp ADR 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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