Correlation Between Jerash Holdings and Carters

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Can any of the company-specific risk be diversified away by investing in both Jerash Holdings and Carters 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 Jerash Holdings and Carters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jerash Holdings US and Carters, you can compare the effects of market volatilities on Jerash Holdings and Carters 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 Jerash Holdings with a short position of Carters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jerash Holdings and Carters.

Diversification Opportunities for Jerash Holdings and Carters

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Jerash and Carters is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Jerash Holdings US and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters and Jerash Holdings 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 Jerash Holdings US are associated (or correlated) with Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of Jerash Holdings i.e., Jerash Holdings and Carters go up and down completely randomly.

Pair Corralation between Jerash Holdings and Carters

Given the investment horizon of 90 days Jerash Holdings is expected to generate 2.05 times less return on investment than Carters. But when comparing it to its historical volatility, Jerash Holdings US is 1.05 times less risky than Carters. It trades about 0.07 of its potential returns per unit of risk. Carters is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  8,116  in Carters on December 30, 2023 and sell it today you would earn a total of  352.00  from holding Carters or generate 4.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Jerash Holdings US  vs.  Carters

 Performance 
       Timeline  
Jerash Holdings US 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Jerash Holdings US has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Jerash Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
Carters 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Carters are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Carters demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Jerash Holdings and Carters Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jerash Holdings and Carters

The main advantage of trading using opposite Jerash Holdings and Carters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jerash Holdings position performs unexpectedly, Carters 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 Carters will offset losses from the drop in Carters' long position.
The idea behind Jerash Holdings US and Carters 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.

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