Correlation Between G III and Raphael Pharmaceutical

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

Diversification Opportunities for G III and Raphael Pharmaceutical

-0.15

Correlation Coefficient

G III  Raphael Pharmaceutical

Good diversification

The 3 months correlation between GIII and Raphael is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Raphael Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raphael Pharmaceutical 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 Raphael Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raphael Pharmaceutical has no effect on the direction of G III i.e., G III and Raphael Pharmaceutical go up and down completely randomly.

Pair Corralation between G III and Raphael Pharmaceutical

Given the investment horizon of 90 days G III Apparel Group is expected to under-perform the Raphael Pharmaceutical. But the stock apears to be less risky and, when comparing its historical volatility, G III Apparel Group is 11.85 times less risky than Raphael Pharmaceutical. The stock trades about -0.23 of its potential returns per unit of risk. The Raphael Pharmaceutical is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Raphael Pharmaceutical on October 12, 2024 and sell it today you would earn a total of  49.00  from holding Raphael Pharmaceutical or generate 188.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

G III Apparel Group  vs.  Raphael Pharmaceutical

G III Apparel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, G III may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Raphael Pharmaceutical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Raphael Pharmaceutical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Raphael Pharmaceutical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G III and Raphael Pharmaceutical

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

The idea behind G III Apparel Group and Raphael Pharmaceutical 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.