Correlation Between Jerash Holdings and Gildan Activewear

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

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

Diversification Opportunities for Jerash Holdings and Gildan Activewear

0.6

Correlation Coefficient

Jerash Holdings  Gildan Activewear

Poor diversification

The 3 months correlation between Jerash and Gildan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Jerash Holdings and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and Jerash Holdings 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 Jerash Holdings are associated (or correlated) with Gildan Activewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gildan Activewear has no effect on the direction of Jerash Holdings i.e., Jerash Holdings and Gildan Activewear go up and down completely randomly.

Pair Corralation between Jerash Holdings and Gildan Activewear

Given the investment horizon of 90 days Jerash Holdings is expected to generate 1.84 times more return on investment than Gildan Activewear. However, Jerash Holdings is 1.84 times more volatile than Gildan Activewear. It trades about 0.15 of its potential returns per unit of risk. Gildan Activewear is currently generating about 0.14 per unit of risk. If you would invest  293.00  in Jerash Holdings on August 30, 2024 and sell it today you would earn a total of  51.00  from holding Jerash Holdings or generate 17.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Jerash Holdings  vs.  Gildan Activewear

Jerash Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jerash Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Jerash Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Gildan Activewear

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 11 (%) 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 December 2024.

Pair Trading with Jerash Holdings and Gildan Activewear

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

The idea behind Jerash Holdings and Gildan Activewear 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.