Correlation Between GlaxoSmithKline PLC and Medy Tox
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Medy Tox 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 Medy Tox 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 Medy Tox, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Medy Tox 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 Medy Tox. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Medy Tox.
Diversification Opportunities for GlaxoSmithKline PLC and Medy Tox
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlaxoSmithKline and Medy is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Medy Tox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medy Tox 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 Medy Tox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medy Tox has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Medy Tox go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Medy Tox
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 11.59 times less return on investment than Medy Tox. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 2.81 times less risky than Medy Tox. It trades about 0.01 of its potential returns per unit of risk. Medy Tox is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11,645,100 in Medy Tox on August 28, 2024 and sell it today you would earn a total of 1,544,900 from holding Medy Tox or generate 13.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.38% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Medy Tox
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Medy Tox |
GlaxoSmithKline PLC and Medy Tox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Medy Tox
The main advantage of trading using opposite GlaxoSmithKline PLC and Medy Tox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Medy Tox 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 Medy Tox will offset losses from the drop in Medy Tox'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 |
| Medy Tox vs. Busan Industrial Co | Medy Tox vs. Busan Ind | Medy Tox vs. Mirae Asset Daewoo | Medy Tox 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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