Correlation Between GMS and Jerash Holdings

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

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

Diversification Opportunities for GMS and Jerash Holdings

-0.52

Correlation Coefficient

GMS  Jerash Holdings

Excellent diversification

The 3 months correlation between GMS and Jerash is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Jerash Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerash Holdings and GMS 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 GMS Inc are associated (or correlated) with Jerash Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jerash Holdings has no effect on the direction of GMS i.e., GMS and Jerash Holdings go up and down completely randomly.

Pair Corralation between GMS and Jerash Holdings

Considering the 90-day investment horizon GMS Inc is expected to under-perform the Jerash Holdings. In addition to that, GMS is 1.09 times more volatile than Jerash Holdings. It trades about -0.16 of its total potential returns per unit of risk. Jerash Holdings is currently generating about 0.07 per unit of volatility. If you would invest  336.00  in Jerash Holdings on December 19, 2024 and sell it today you would earn a total of  21.00  from holding Jerash Holdings or generate 6.25% return on investment over 90 days.

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

GMS Inc  vs.  Jerash Holdings

GMS Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Jerash Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jerash Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Jerash Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GMS and Jerash Holdings

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

The idea behind GMS Inc and Jerash 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.