Correlation Between Levi Strauss and Jerash Holdings

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

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

Diversification Opportunities for Levi Strauss and Jerash Holdings

-0.34

Correlation Coefficient

Levi Strauss  Jerash Holdings

Very good diversification

The 3 months correlation between Levi and Jerash is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and Jerash Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jerash Holdings and Levi Strauss 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 Levi Strauss Co 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 Levi Strauss i.e., Levi Strauss and Jerash Holdings go up and down completely randomly.

Pair Corralation between Levi Strauss and Jerash Holdings

Given the investment horizon of 90 days Levi Strauss is expected to generate 2.61 times less return on investment than Jerash Holdings. But when comparing it to its historical volatility, Levi Strauss Co is 1.32 times less risky than Jerash Holdings. It trades about 0.08 of its potential returns per unit of risk. Jerash Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  296.00  in Jerash Holdings on October 11, 2024 and sell it today you would earn a total of  44.00  from holding Jerash Holdings or generate 14.86% return on investment over 90 days.

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

Levi Strauss Co  vs.  Jerash Holdings

Levi Strauss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Levi Strauss Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Levi Strauss is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Jerash Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jerash Holdings are ranked lower than 10 (%) 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.

Pair Trading with Levi Strauss and Jerash Holdings

The main advantage of trading using opposite Levi Strauss and Jerash Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Levi Strauss 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 Levi Strauss Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.