Correlation Between Chiba Bank and Toromont Industries

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

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

Diversification Opportunities for Chiba Bank and Toromont Industries

0.68

Correlation Coefficient

Chiba Bank  Toromont Industries

Poor diversification

The 3 months correlation between Chiba and Toromont is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank Ltd and Toromont Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toromont Industries and Chiba Bank 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 Chiba Bank Ltd are associated (or correlated) with Toromont Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toromont Industries has no effect on the direction of Chiba Bank i.e., Chiba Bank and Toromont Industries go up and down completely randomly.

Pair Corralation between Chiba Bank and Toromont Industries

Assuming the 90 days horizon Chiba Bank is expected to generate 1.56 times less return on investment than Toromont Industries. But when comparing it to its historical volatility, Chiba Bank Ltd is 1.08 times less risky than Toromont Industries. It trades about 0.16 of its potential returns per unit of risk. Toromont Industries is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  8,450  in Toromont Industries on May 5, 2025 and sell it today you would earn a total of  1,586  from holding Toromont Industries or generate 18.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Chiba Bank Ltd  vs.  Toromont Industries

Chiba Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chiba Bank Ltd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chiba Bank may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Toromont Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Toromont Industries are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Toromont Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chiba Bank and Toromont Industries

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

The idea behind Chiba Bank Ltd and Toromont Industries 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.