Correlation Between G III and Tokyo Electron

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

Diversification Opportunities for G III and Tokyo Electron

-0.05

Correlation Coefficient

G III  Tokyo Electron

Good diversification

The 3 months correlation between GIII and Tokyo is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Tokyo Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron 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 Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of G III i.e., G III and Tokyo Electron go up and down completely randomly.

Pair Corralation between G III and Tokyo Electron

Given the investment horizon of 90 days G III Apparel Group is expected to generate 1.0 times more return on investment than Tokyo Electron. However, G III Apparel Group is 1.0 times less risky than Tokyo Electron. It trades about 0.04 of its potential returns per unit of risk. Tokyo Electron is currently generating about -0.09 per unit of risk. If you would invest  3,158  in G III Apparel Group on October 8, 2024 and sell it today you would earn a total of  56.00  from holding G III Apparel Group or generate 1.77% return on investment over 90 days.

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

G III Apparel Group  vs.  Tokyo Electron

G III Apparel

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 5 (%) 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.

Tokyo Electron

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with G III and Tokyo Electron

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

The idea behind G III Apparel Group and Tokyo Electron 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.