Correlation Between GlaxoSmithKline PLC and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Industrial Bank 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 Industrial Bank 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 Industrial Bank, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Industrial Bank 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 Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Industrial Bank.
Diversification Opportunities for GlaxoSmithKline PLC and Industrial Bank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Industrial is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Industrial Bank go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Industrial Bank
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 3.41 times less return on investment than Industrial Bank. In addition to that, GlaxoSmithKline PLC is 1.17 times more volatile than Industrial Bank. It trades about 0.02 of its total potential returns per unit of risk. Industrial Bank is currently generating about 0.1 per unit of volatility. If you would invest 877,196 in Industrial Bank on January 29, 2025 and sell it today you would earn a total of 615,804 from holding Industrial Bank or generate 70.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.36% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Industrial Bank
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Industrial Bank |
GlaxoSmithKline PLC and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Industrial Bank
The main advantage of trading using opposite GlaxoSmithKline PLC and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank'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 |
| Industrial Bank vs. Hanshin Construction Co | Industrial Bank vs. Hana Financial | Industrial Bank vs. Namkwang Engineering Construction | Industrial Bank vs. Hankukpackage Co |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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