Correlation Between ITOCHU and Seaboard

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

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

Diversification Opportunities for ITOCHU and Seaboard

-0.45

Correlation Coefficient

ITOCHU  Seaboard

Very good diversification

The 3 months correlation between ITOCHU and Seaboard is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ITOCHU and Seaboard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaboard and ITOCHU 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 ITOCHU 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 ITOCHU i.e., ITOCHU and Seaboard go up and down completely randomly.

Pair Corralation between ITOCHU and Seaboard

Assuming the 90 days horizon ITOCHU is expected to generate 6.38 times less return on investment than Seaboard. But when comparing it to its historical volatility, ITOCHU is 1.04 times less risky than Seaboard. It trades about 0.04 of its potential returns per unit of risk. Seaboard is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  227,769  in Seaboard on May 3, 2025 and sell it today you would earn a total of  54,231  from holding Seaboard or generate 23.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ITOCHU  vs.  Seaboard

ITOCHU

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ITOCHU are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ITOCHU 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

Solid

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

Pair Trading with ITOCHU and Seaboard

The main advantage of trading using opposite ITOCHU and Seaboard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITOCHU 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 ITOCHU 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.