Correlation Between Mitsui Co and Itochu Corp

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

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

Diversification Opportunities for Mitsui Co and Itochu Corp

0.52

Correlation Coefficient

Mitsui Co  Itochu Corp

Very weak diversification

The 3 months correlation between Mitsui and Itochu is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Co and Itochu Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itochu Corp ADR and Mitsui Co 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 Co are associated (or correlated) with Itochu Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itochu Corp ADR has no effect on the direction of Mitsui Co i.e., Mitsui Co and Itochu Corp go up and down completely randomly.

Pair Corralation between Mitsui Co and Itochu Corp

Assuming the 90 days horizon Mitsui Co is expected to generate 1.8 times more return on investment than Itochu Corp. However, Mitsui Co is 1.8 times more volatile than Itochu Corp ADR. It trades about 0.12 of its potential returns per unit of risk. Itochu Corp ADR is currently generating about 0.07 per unit of risk. If you would invest  2,122  in Mitsui Co on August 26, 2025 and sell it today you would earn a total of  428.00  from holding Mitsui Co or generate 20.17% return on investment over 90 days.

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

Mitsui Co  vs.  Itochu Corp ADR

Mitsui Co

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Mitsui Co reported solid returns over the last few months and may actually be approaching a breakup point.

Itochu Corp ADR

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Itochu Corp ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Itochu Corp may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with Mitsui Co and Itochu Corp

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

The idea behind Mitsui Co and Itochu 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 Global Correlations module to find global opportunities by holding instruments from different markets.