Correlation Between GlaxoSmithKline PLC and Kuk Young
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Kuk Young 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 GlaxoSmithKline PLC and Kuk Young into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlaxoSmithKline PLC ADR and Kuk Young GM, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Kuk Young 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 GlaxoSmithKline PLC with a short position of Kuk Young. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Kuk Young.
Diversification Opportunities for GlaxoSmithKline PLC and Kuk Young
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Kuk is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Kuk Young GM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuk Young GM and GlaxoSmithKline 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 GlaxoSmithKline PLC ADR are associated (or correlated) with Kuk Young. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuk Young GM has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Kuk Young go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Kuk Young
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Kuk Young. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 6.75 times less risky than Kuk Young. The stock trades about -0.31 of its potential returns per unit of risk. The Kuk Young GM is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 195,500 in Kuk Young GM on August 28, 2024 and sell it today you would lose (12,100) from holding Kuk Young GM or give up 6.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Kuk Young GM
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Kuk Young GM |
GlaxoSmithKline PLC and Kuk Young Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Kuk Young
The main advantage of trading using opposite GlaxoSmithKline PLC and Kuk Young positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Kuk Young 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 Kuk Young will offset losses from the drop in Kuk Young's long position.| GlaxoSmithKline PLC vs. Novartis AG ADR | GlaxoSmithKline PLC vs. AstraZeneca PLC ADR | GlaxoSmithKline PLC vs. Roche Holding Ltd | GlaxoSmithKline PLC vs. Bristol Myers Squibb |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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