Correlation Between Abercrombie Fitch and Jerash Holdings

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

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

Diversification Opportunities for Abercrombie Fitch and Jerash Holdings

0.33

Correlation Coefficient

Abercrombie Fitch  Jerash Holdings

Weak diversification

The 3 months correlation between Abercrombie and Jerash is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Abercrombie Fitch and Jerash Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerash Holdings and Abercrombie Fitch 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 Abercrombie Fitch are associated (or correlated) with Jerash Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jerash Holdings has no effect on the direction of Abercrombie Fitch i.e., Abercrombie Fitch and Jerash Holdings go up and down completely randomly.

Pair Corralation between Abercrombie Fitch and Jerash Holdings

Considering the 90-day investment horizon Abercrombie Fitch is expected to generate 3.81 times less return on investment than Jerash Holdings. In addition to that, Abercrombie Fitch is 1.63 times more volatile than Jerash Holdings. It trades about 0.02 of its total potential returns per unit of risk. Jerash Holdings is currently generating about 0.13 per unit of volatility. If you would invest  293.00  in Jerash Holdings on October 11, 2024 and sell it today you would earn a total of  47.00  from holding Jerash Holdings or generate 16.04% return on investment over 90 days.

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

Abercrombie Fitch  vs.  Jerash Holdings

Abercrombie Fitch

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Abercrombie Fitch are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Abercrombie Fitch is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Jerash Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jerash Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Jerash Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abercrombie Fitch and Jerash Holdings

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

The idea behind Abercrombie Fitch and Jerash Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.