Correlation Between GlaxoSmithKline PLC and Sinphar Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sinphar Pharmaceutical 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 Sinphar Pharmaceutical 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 Sinphar Pharmaceutical Co, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sinphar Pharmaceutical 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 Sinphar Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sinphar Pharmaceutical.
Diversification Opportunities for GlaxoSmithKline PLC and Sinphar Pharmaceutical
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Sinphar is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sinphar Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinphar Pharmaceutical 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 Sinphar Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinphar Pharmaceutical has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sinphar Pharmaceutical go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Sinphar Pharmaceutical
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Sinphar Pharmaceutical. In addition to that, GlaxoSmithKline PLC is 2.79 times more volatile than Sinphar Pharmaceutical Co. It trades about -0.31 of its total potential returns per unit of risk. Sinphar Pharmaceutical Co is currently generating about 0.08 per unit of volatility. If you would invest 3,100 in Sinphar Pharmaceutical Co on August 29, 2024 and sell it today you would earn a total of 25.00 from holding Sinphar Pharmaceutical Co or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Sinphar Pharmaceutical Co
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Sinphar Pharmaceutical |
GlaxoSmithKline PLC and Sinphar Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Sinphar Pharmaceutical
The main advantage of trading using opposite GlaxoSmithKline PLC and Sinphar Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sinphar Pharmaceutical 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 Sinphar Pharmaceutical will offset losses from the drop in Sinphar Pharmaceutical'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 |
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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