Correlation Between GlaxoSmithKline PLC and Taisun Enterprise
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Taisun Enterprise 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 Taisun Enterprise 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 Taisun Enterprise Co, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Taisun Enterprise 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 Taisun Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Taisun Enterprise.
Diversification Opportunities for GlaxoSmithKline PLC and Taisun Enterprise
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Taisun is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Taisun Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taisun Enterprise 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 Taisun Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taisun Enterprise has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Taisun Enterprise go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Taisun Enterprise
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Taisun Enterprise. In addition to that, GlaxoSmithKline PLC is 1.83 times more volatile than Taisun Enterprise Co. It trades about -0.24 of its total potential returns per unit of risk. Taisun Enterprise Co is currently generating about 0.12 per unit of volatility. If you would invest 2,065 in Taisun Enterprise Co on August 28, 2024 and sell it today you would earn a total of 85.00 from holding Taisun Enterprise Co or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Taisun Enterprise Co
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Taisun Enterprise |
GlaxoSmithKline PLC and Taisun Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Taisun Enterprise
The main advantage of trading using opposite GlaxoSmithKline PLC and Taisun Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Taisun Enterprise 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 Taisun Enterprise will offset losses from the drop in Taisun Enterprise'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 |
| Taisun Enterprise vs. Taiwan Cement Corp | Taisun Enterprise vs. Ruentex Development Co | Taisun Enterprise vs. Symtek Automation Asia | Taisun Enterprise vs. CTCI Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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