Correlation Between Gildan Activewear and Charles Colvard

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

By analyzing existing cross correlation between Gildan Activewear and Charles Colvard, you can compare the effects of market volatilities on Gildan Activewear and Charles Colvard 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 Charles Colvard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and Charles Colvard.

Diversification Opportunities for Gildan Activewear and Charles Colvard

-0.51

Correlation Coefficient

Gildan Activewear  Charles Colvard

Excellent diversification

The 3 months correlation between Gildan and Charles is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Charles Colvard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Colvard 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 Charles Colvard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles Colvard has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Charles Colvard go up and down completely randomly.

Pair Corralation between Gildan Activewear and Charles Colvard

Considering the 90-day investment horizon Gildan Activewear is expected to generate 0.29 times more return on investment than Charles Colvard. However, Gildan Activewear is 3.46 times less risky than Charles Colvard. It trades about 0.13 of its potential returns per unit of risk. Charles Colvard is currently generating about -0.07 per unit of risk. If you would invest  3,089  in Gildan Activewear on October 2, 2024 and sell it today you would earn a total of  1,616  from holding Gildan Activewear or generate 52.31% return on investment over 90 days.

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

Gildan Activewear  vs.  Charles Colvard

Gildan Activewear

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Gildan Activewear is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Charles Colvard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charles Colvard has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Gildan Activewear and Charles Colvard

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

The idea behind Gildan Activewear and Charles Colvard 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.