Correlation Between Jerash Holdings and Gildan Activewear
Can any of the company-specific risk be diversified away by investing in both Jerash Holdings and Gildan Activewear 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 Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jerash Holdings and Gildan Activewear, you can compare the effects of market volatilities on Jerash Holdings and Gildan Activewear 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 Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jerash Holdings and Gildan Activewear.
Diversification Opportunities for Jerash Holdings and Gildan Activewear
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Jerash and Gildan is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Jerash Holdings and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear 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 are associated (or correlated) with Gildan Activewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gildan Activewear has no effect on the direction of Jerash Holdings i.e., Jerash Holdings and Gildan Activewear go up and down completely randomly.
Pair Corralation between Jerash Holdings and Gildan Activewear
Given the investment horizon of 90 days Jerash Holdings is expected to under-perform the Gildan Activewear. In addition to that, Jerash Holdings is 1.1 times more volatile than Gildan Activewear. It trades about -0.03 of its total potential returns per unit of risk. Gildan Activewear is currently generating about 0.02 per unit of volatility. If you would invest 3,267 in Gildan Activewear on January 17, 2024 and sell it today you would earn a total of 266.00 from holding Gildan Activewear or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jerash Holdings vs. Gildan Activewear
Performance |
| Timeline |
| Jerash Holdings |
| Gildan Activewear |
Jerash Holdings and Gildan Activewear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jerash Holdings and Gildan Activewear
The main advantage of trading using opposite Jerash Holdings and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jerash Holdings position performs unexpectedly, Gildan Activewear 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 Gildan Activewear will offset losses from the drop in Gildan Activewear's long position.The idea behind Jerash Holdings and Gildan Activewear 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.| Gildan Activewear vs. Signet Jewelers | Gildan Activewear vs. TheRealReal | Gildan Activewear vs. Envela Corp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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