Correlation Between Marubeni and Seaboard

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

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

Diversification Opportunities for Marubeni and Seaboard

0.36

Correlation Coefficient

Marubeni  Seaboard

Weak diversification

The 3 months correlation between Marubeni and Seaboard is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Marubeni and Seaboard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaboard and Marubeni 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 Marubeni are associated (or correlated) with Seaboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaboard has no effect on the direction of Marubeni i.e., Marubeni and Seaboard go up and down completely randomly.

Pair Corralation between Marubeni and Seaboard

Assuming the 90 days trading horizon Marubeni is expected to generate 1.29 times more return on investment than Seaboard. However, Marubeni is 1.29 times more volatile than Seaboard. It trades about 0.01 of its potential returns per unit of risk. Seaboard is currently generating about -0.16 per unit of risk. If you would invest  1,395  in Marubeni on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Marubeni or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Marubeni  vs.  Seaboard

Marubeni

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marubeni has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Marubeni is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Marubeni and Seaboard

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

The idea behind Marubeni and Seaboard 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.