Correlation Between GSK Plc and Energisa
Can any of the company-specific risk be diversified away by investing in both GSK Plc and Energisa 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 GSK Plc and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GSK plc and Energisa SA, you can compare the effects of market volatilities on GSK Plc and Energisa 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 GSK Plc with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of GSK Plc and Energisa.
Diversification Opportunities for GSK Plc and Energisa
Almost no diversification
The 3 months correlation between GSK and Energisa is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding GSK plc and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and GSK Plc 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 GSK plc are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of GSK Plc i.e., GSK Plc and Energisa go up and down completely randomly.
Pair Corralation between GSK Plc and Energisa
Assuming the 90 days trading horizon GSK plc is expected to generate 0.94 times more return on investment than Energisa. However, GSK plc is 1.06 times less risky than Energisa. It trades about -0.02 of its potential returns per unit of risk. Energisa SA is currently generating about -0.17 per unit of risk. If you would invest 4,161 in GSK plc on September 1, 2024 and sell it today you would lose (54.00) from holding GSK plc or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
GSK plc vs. Energisa SA
Performance |
| Timeline |
| GSK plc |
| Energisa SA |
GSK Plc and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GSK Plc and Energisa
The main advantage of trading using opposite GSK Plc and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GSK Plc position performs unexpectedly, Energisa 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 Energisa will offset losses from the drop in Energisa's long position.| GSK Plc vs. Energisa SA | GSK Plc vs. BTG Pactual Logstica | GSK Plc vs. Plano Plano Desenvolvimento | GSK Plc vs. Companhia Habitasul de |
| Energisa vs. Transmissora Aliana de | Energisa vs. CTEEP Companhia | Energisa vs. Companhia Paranaense de | Energisa vs. Companhia Energtica de |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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