Correlation Between Jerash Holdings and Moncler SpA

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

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

Diversification Opportunities for Jerash Holdings and Moncler SpA

0.84

Correlation Coefficient

Jerash Holdings  Moncler SpA

Very poor diversification

The 3 months correlation between Jerash and Moncler is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Jerash Holdings and Moncler SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moncler SpA 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 Moncler SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moncler SpA has no effect on the direction of Jerash Holdings i.e., Jerash Holdings and Moncler SpA go up and down completely randomly.

Pair Corralation between Jerash Holdings and Moncler SpA

Given the investment horizon of 90 days Jerash Holdings is expected to generate 4.44 times less return on investment than Moncler SpA. But when comparing it to its historical volatility, Jerash Holdings is 1.29 times less risky than Moncler SpA. It trades about 0.08 of its potential returns per unit of risk. Moncler SpA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  4,775  in Moncler SpA on December 1, 2024 and sell it today you would earn a total of  2,001  from holding Moncler SpA or generate 41.91% return on investment over 90 days.

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

Jerash Holdings  vs.  Moncler SpA

Jerash Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jerash Holdings are ranked lower than 6 (%) 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.

Moncler SpA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Moncler SpA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Moncler SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jerash Holdings and Moncler SpA

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

The idea behind Jerash Holdings and Moncler SpA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.