Correlation Between G-III Apparel and H M

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

By analyzing existing cross correlation between G III Apparel Group and H M Hennes, you can compare the effects of market volatilities on G-III Apparel and H M 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 G-III Apparel with a short position of H M. Check out your portfolio center. Please also check ongoing floating volatility patterns of G-III Apparel and H M.

Diversification Opportunities for G-III Apparel and H M

0.47

Correlation Coefficient

G-III Apparel  H M

Very weak diversification

The 3 months correlation between G-III and HMSB is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and H M Hennes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H M Hennes and G-III Apparel 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 G III Apparel Group are associated (or correlated) with H M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H M Hennes has no effect on the direction of G-III Apparel i.e., G-III Apparel and H M go up and down completely randomly.

Pair Corralation between G-III Apparel and H M

Assuming the 90 days horizon G III Apparel Group is expected to under-perform the H M. But the stock apears to be less risky and, when comparing its historical volatility, G III Apparel Group is 1.06 times less risky than H M. The stock trades about -0.15 of its potential returns per unit of risk. The H M Hennes is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,296  in H M Hennes on December 29, 2024 and sell it today you would lose (66.00) from holding H M Hennes or give up 5.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

G III Apparel Group  vs.  H M Hennes

G III Apparel

Risk-Adjusted Performance

Very Weak

Over the last 90 days G III Apparel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

H M Hennes

Risk-Adjusted Performance

Very Weak

Over the last 90 days H M Hennes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, H M is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with G-III Apparel and H M

The main advantage of trading using opposite G-III Apparel and H M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G-III Apparel position performs unexpectedly, H M 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 H M will offset losses from the drop in H M's long position.

The idea behind G III Apparel Group and H M Hennes 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.