Correlation Between G III and Jerash Holdings

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

Diversification Opportunities for G III and Jerash Holdings

0.03

Correlation Coefficient

G III  Jerash Holdings

Significant diversification

The 3 months correlation between GIII and Jerash is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Jerash Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerash Holdings 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 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 G III i.e., G III and Jerash Holdings go up and down completely randomly.

Pair Corralation between G III and Jerash Holdings

Given the investment horizon of 90 days G III Apparel Group is expected to generate 1.97 times more return on investment than Jerash Holdings. However, G III is 1.97 times more volatile than Jerash Holdings. It trades about 0.09 of its potential returns per unit of risk. Jerash Holdings is currently generating about 0.17 per unit of risk. If you would invest  2,524  in G III Apparel Group on September 2, 2024 and sell it today you would earn a total of  439.00  from holding G III Apparel Group or generate 17.39% return on investment over 90 days.

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

G III Apparel Group  vs.  Jerash Holdings

G III Apparel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, G III demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Jerash Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jerash Holdings are ranked lower than 13 (%) 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 G III and Jerash Holdings

The main advantage of trading using opposite G III and Jerash Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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 G III Apparel Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.