Correlation Between G III and ROHM

Can any of the company-specific risk be diversified away by investing in both G III and ROHM 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 and ROHM 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 ROHM Co, you can compare the effects of market volatilities on G III and ROHM 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 with a short position of ROHM. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and ROHM.

Diversification Opportunities for G III and ROHM

-0.63

Correlation Coefficient

G III  ROHM

Excellent diversification

The 3 months correlation between GI4 and ROHM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and ROHM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROHM and G III 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 ROHM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROHM has no effect on the direction of G III i.e., G III and ROHM go up and down completely randomly.

Pair Corralation between G III and ROHM

Assuming the 90 days trading horizon G III Apparel Group is expected to under-perform the ROHM. But the stock apears to be less risky and, when comparing its historical volatility, G III Apparel Group is 1.15 times less risky than ROHM. The stock trades about -0.21 of its potential returns per unit of risk. The ROHM Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  859.00  in ROHM Co on December 21, 2024 and sell it today you would earn a total of  120.00  from holding ROHM Co or generate 13.97% return on investment over 90 days.

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

G III Apparel Group  vs.  ROHM Co

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ROHM

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ROHM Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ROHM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G III and ROHM

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

The idea behind G III Apparel Group and ROHM Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.