Correlation Between NISSAN CHEMICAL and G-III Apparel

Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL and G-III Apparel 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 NISSAN CHEMICAL and G-III Apparel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NISSAN CHEMICAL IND and G III Apparel Group, you can compare the effects of market volatilities on NISSAN CHEMICAL and G-III Apparel 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 NISSAN CHEMICAL with a short position of G-III Apparel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and G-III Apparel.

Diversification Opportunities for NISSAN CHEMICAL and G-III Apparel

0.46

Correlation Coefficient

NISSAN CHEMICAL  G-III Apparel

Very weak diversification

The 3 months correlation between NISSAN and G-III is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel and NISSAN CHEMICAL 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 NISSAN CHEMICAL IND are associated (or correlated) with G-III Apparel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and G-III Apparel go up and down completely randomly.

Pair Corralation between NISSAN CHEMICAL and G-III Apparel

Assuming the 90 days trading horizon NISSAN CHEMICAL is expected to generate 2.73 times less return on investment than G-III Apparel. But when comparing it to its historical volatility, NISSAN CHEMICAL IND is 2.03 times less risky than G-III Apparel. It trades about 0.08 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,580  in G III Apparel Group on September 4, 2024 and sell it today you would earn a total of  220.00  from holding G III Apparel Group or generate 8.53% return on investment over 90 days.

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

NISSAN CHEMICAL IND  vs.  G III Apparel Group

NISSAN CHEMICAL IND

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NISSAN CHEMICAL IND are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, NISSAN CHEMICAL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

G III Apparel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, G-III Apparel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NISSAN CHEMICAL and G-III Apparel

The main advantage of trading using opposite NISSAN CHEMICAL and G-III Apparel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSAN CHEMICAL position performs unexpectedly, G-III Apparel 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 G-III Apparel will offset losses from the drop in G-III Apparel's long position.

The idea behind NISSAN CHEMICAL IND and G III Apparel Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.