Correlation Between G-III Apparel and Sanyo Chemical

Can any of the company-specific risk be diversified away by investing in both G-III Apparel and Sanyo Chemical 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 Apparel and Sanyo Chemical 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 Sanyo Chemical Industries, you can compare the effects of market volatilities on G-III Apparel and Sanyo Chemical 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 Apparel with a short position of Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of G-III Apparel and Sanyo Chemical.

Diversification Opportunities for G-III Apparel and Sanyo Chemical

-0.06

Correlation Coefficient

G-III Apparel  Sanyo Chemical

Good diversification

The 3 months correlation between G-III and Sanyo is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries and G-III Apparel 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of G-III Apparel i.e., G-III Apparel and Sanyo Chemical go up and down completely randomly.

Pair Corralation between G-III Apparel and Sanyo Chemical

Assuming the 90 days horizon G III Apparel Group is expected to generate 3.71 times more return on investment than Sanyo Chemical. However, G-III Apparel is 3.71 times more volatile than Sanyo Chemical Industries. It trades about 0.11 of its potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.01 per unit of risk. If you would invest  2,260  in G III Apparel Group on September 4, 2024 and sell it today you would earn a total of  540.00  from holding G III Apparel Group or generate 23.89% return on investment over 90 days.

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

G III Apparel Group  vs.  Sanyo Chemical Industries

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 fragile basic indicators, G-III Apparel reported solid returns over the last few months and may actually be approaching a breakup point.

Sanyo Chemical Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with G-III Apparel and Sanyo Chemical

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

The idea behind G III Apparel Group and Sanyo Chemical Industries 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.