Correlation Between H M and Gildan Activewear

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Can any of the company-specific risk be diversified away by investing in both H M and Gildan Activewear 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 H M and Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H M Hennes and Gildan Activewear, you can compare the effects of market volatilities on H M and Gildan Activewear 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 H M with a short position of Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and Gildan Activewear.

Diversification Opportunities for H M and Gildan Activewear

0.59
  Correlation Coefficient
 H M

Very weak diversification

The 3 months correlation between HMSB and Gildan is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear and H M 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 H M Hennes are associated (or correlated) with Gildan Activewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gildan Activewear has no effect on the direction of H M i.e., H M and Gildan Activewear go up and down completely randomly.

Pair Corralation between H M and Gildan Activewear

Assuming the 90 days trading horizon H M Hennes is expected to generate 4.47 times more return on investment than Gildan Activewear. However, H M is 4.47 times more volatile than Gildan Activewear. It trades about 0.13 of its potential returns per unit of risk. Gildan Activewear is currently generating about 0.33 per unit of risk. If you would invest  1,189  in H M Hennes on August 28, 2024 and sell it today you would earn a total of  162.00  from holding H M Hennes or generate 13.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

H M Hennes  vs.  Gildan Activewear

 Performance 
       Timeline  
H M Hennes 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in H M Hennes are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, H M exhibited solid returns over the last few months and may actually be approaching a breakup point.
Gildan Activewear 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gildan Activewear reported solid returns over the last few months and may actually be approaching a breakup point.

H M and Gildan Activewear Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with H M and Gildan Activewear

The main advantage of trading using opposite H M and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H M position performs unexpectedly, Gildan Activewear 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 Gildan Activewear will offset losses from the drop in Gildan Activewear's long position.
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The idea behind H M Hennes and Gildan Activewear 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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