Correlation Between GSK Plc and Santen Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both GSK Plc and Santen Pharmaceutical 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 Santen Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GSK plc and Santen Pharmaceutical Co, you can compare the effects of market volatilities on GSK Plc and Santen Pharmaceutical 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 Santen Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GSK Plc and Santen Pharmaceutical.
Diversification Opportunities for GSK Plc and Santen Pharmaceutical
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between GSK and Santen is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding GSK plc and Santen Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santen Pharmaceutical 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 Santen Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santen Pharmaceutical has no effect on the direction of GSK Plc i.e., GSK Plc and Santen Pharmaceutical go up and down completely randomly.
Pair Corralation between GSK Plc and Santen Pharmaceutical
If you would invest 1,730 in GSK plc on December 3, 2024 and sell it today you would earn a total of 168.00 from holding GSK plc or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GSK plc vs. Santen Pharmaceutical Co
Performance |
| Timeline |
| GSK plc |
| Santen Pharmaceutical |
GSK Plc and Santen Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GSK Plc and Santen Pharmaceutical
The main advantage of trading using opposite GSK Plc and Santen Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GSK Plc position performs unexpectedly, Santen Pharmaceutical 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 Santen Pharmaceutical will offset losses from the drop in Santen Pharmaceutical's long position.| GSK Plc vs. Santen Pharmaceutical Co | ||
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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