Correlation Between GlaxoSmithKline PLC and Haesung Industrial
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Haesung Industrial 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 Haesung Industrial 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 Haesung Industrial Co, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Haesung Industrial 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 Haesung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Haesung Industrial.
Diversification Opportunities for GlaxoSmithKline PLC and Haesung Industrial
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Haesung is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Haesung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haesung Industrial 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 Haesung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haesung Industrial has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Haesung Industrial go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Haesung Industrial
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Haesung Industrial. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.19 times less risky than Haesung Industrial. The stock trades about -0.26 of its potential returns per unit of risk. The Haesung Industrial Co is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 658,000 in Haesung Industrial Co on August 25, 2024 and sell it today you would lose (51,000) from holding Haesung Industrial Co or give up 7.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.33% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Haesung Industrial Co
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Haesung Industrial |
GlaxoSmithKline PLC and Haesung Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Haesung Industrial
The main advantage of trading using opposite GlaxoSmithKline PLC and Haesung Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Haesung Industrial 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 Haesung Industrial will offset losses from the drop in Haesung Industrial'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 |
| Haesung Industrial vs. Busan Industrial Co | Haesung Industrial vs. Busan Ind | Haesung Industrial vs. Mirae Asset Daewoo | Haesung Industrial vs. UNISEM 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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