Correlation Between G III and CN MODERN
Can any of the company-specific risk be diversified away by investing in both G III and CN MODERN 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 G III and CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III Apparel Group and CN MODERN DAIRY, you can compare the effects of market volatilities on G III and CN MODERN 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 G III with a short position of CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and CN MODERN.
Diversification Opportunities for G III and CN MODERN
Weak diversification
The 3 months correlation between GI4 and 07M is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY and G III 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 G III Apparel Group are associated (or correlated) with CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of G III i.e., G III and CN MODERN go up and down completely randomly.
Pair Corralation between G III and CN MODERN
Assuming the 90 days trading horizon G III is expected to generate 2.81 times less return on investment than CN MODERN. In addition to that, G III is 1.18 times more volatile than CN MODERN DAIRY. It trades about 0.01 of its total potential returns per unit of risk. CN MODERN DAIRY is currently generating about 0.05 per unit of volatility. If you would invest 8.11 in CN MODERN DAIRY on September 3, 2024 and sell it today you would earn a total of 1.14 from holding CN MODERN DAIRY or generate 14.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. CN MODERN DAIRY
Performance |
| Timeline |
| G III Apparel |
| CN MODERN DAIRY |
G III and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and CN MODERN
The main advantage of trading using opposite G III and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.| G III vs. Westlake Chemical | G III vs. SK TELECOM TDADR | G III vs. Gamma Communications plc | G III vs. KINGBOARD CHEMICAL |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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