Correlation Between THORNEY TECHS and G III

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

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

Diversification Opportunities for THORNEY TECHS and G III

0.11

Correlation Coefficient

THORNEY TECHS  G III

Average diversification

The 3 months correlation between THORNEY and GI4 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD 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 THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with G III. 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 THORNEY TECHS i.e., THORNEY TECHS and G III go up and down completely randomly.

Pair Corralation between THORNEY TECHS and G III

Assuming the 90 days horizon THORNEY TECHS LTD is expected to under-perform the G III. In addition to that, THORNEY TECHS is 1.1 times more volatile than G III Apparel Group. It trades about -0.19 of its total potential returns per unit of risk. G III Apparel Group is currently generating about 0.22 per unit of volatility. If you would invest  2,860  in G III Apparel Group on September 17, 2024 and sell it today you would earn a total of  440.00  from holding G III Apparel Group or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

THORNEY TECHS LTD  vs.  G III Apparel Group

THORNEY TECHS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THORNEY TECHS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, THORNEY TECHS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

G III Apparel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, G III unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with THORNEY TECHS and G III

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

The idea behind THORNEY TECHS LTD 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.