Correlation Between Gildan Activewear and Distoken Acquisition

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

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

Diversification Opportunities for Gildan Activewear and Distoken Acquisition

0.45

Correlation Coefficient

Gildan Activewear  Distoken Acquisition

Very weak diversification

The 3 months correlation between Gildan and Distoken is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear and Distoken Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distoken Acquisition 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 Distoken Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distoken Acquisition has no effect on the direction of Gildan Activewear i.e., Gildan Activewear and Distoken Acquisition go up and down completely randomly.

Pair Corralation between Gildan Activewear and Distoken Acquisition

Considering the 90-day investment horizon Gildan Activewear is expected to generate 20.0 times less return on investment than Distoken Acquisition. But when comparing it to its historical volatility, Gildan Activewear is 27.26 times less risky than Distoken Acquisition. It trades about 0.07 of its potential returns per unit of risk. Distoken Acquisition is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Distoken Acquisition on October 5, 2024 and sell it today you would earn a total of  1,120  from holding Distoken Acquisition or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.8%
Values	Daily Returns

Gildan Activewear  vs.  Distoken Acquisition

Gildan Activewear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gildan Activewear has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Distoken Acquisition

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Distoken Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Distoken Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gildan Activewear and Distoken Acquisition

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

The idea behind Gildan Activewear and Distoken Acquisition 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.