Correlation Between Gildan Activewear and Bosideng International

Can any of the company-specific risk be diversified away by investing in both Gildan Activewear and Bosideng International 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 Gildan Activewear and Bosideng International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gildan Activewear and Bosideng International Holdings, you can compare the effects of market volatilities on Gildan Activewear and Bosideng International 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 Gildan Activewear with a short position of Bosideng International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and Bosideng International.

Diversification Opportunities for Gildan Activewear and Bosideng International

0.4

Correlation Coefficient

Gildan Activewear  Bosideng International

Very weak diversification

The 3 months correlation between Gildan and Bosideng is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Bosideng International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosideng International and Gildan Activewear 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 Gildan Activewear are associated (or correlated) with Bosideng International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosideng International has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Bosideng International go up and down completely randomly.

Pair Corralation between Gildan Activewear and Bosideng International

Considering the 90-day investment horizon Gildan Activewear is expected to generate 0.34 times more return on investment than Bosideng International. However, Gildan Activewear is 2.94 times less risky than Bosideng International. It trades about 0.2 of its potential returns per unit of risk. Bosideng International Holdings is currently generating about 0.02 per unit of risk. If you would invest  4,464  in Gildan Activewear on September 4, 2024 and sell it today you would earn a total of  547.00  from holding Gildan Activewear or generate 12.25% return on investment over 90 days.

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

Gildan Activewear  vs.  Bosideng International Holding

Gildan Activewear

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward indicators, Gildan Activewear may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bosideng International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bosideng International Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Bosideng International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gildan Activewear and Bosideng International

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

The idea behind Gildan Activewear and Bosideng International 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.