Correlation Between GlaxoSmithKline PLC and Silicon Integrated
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Silicon Integrated 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 Silicon Integrated 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 Silicon Integrated Systems, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Silicon Integrated 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 Silicon Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Silicon Integrated.
Diversification Opportunities for GlaxoSmithKline PLC and Silicon Integrated
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Silicon is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Silicon Integrated Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Integrated 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 Silicon Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Integrated has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Silicon Integrated go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Silicon Integrated
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Silicon Integrated. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.7 times less risky than Silicon Integrated. The stock trades about -0.23 of its potential returns per unit of risk. The Silicon Integrated Systems is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 7,100 in Silicon Integrated Systems on August 31, 2024 and sell it today you would lose (280.00) from holding Silicon Integrated Systems or give up 3.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Silicon Integrated Systems
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Silicon Integrated |
GlaxoSmithKline PLC and Silicon Integrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Silicon Integrated
The main advantage of trading using opposite GlaxoSmithKline PLC and Silicon Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Silicon Integrated 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 Silicon Integrated will offset losses from the drop in Silicon Integrated'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 |
| Silicon Integrated vs. United Microelectronics | Silicon Integrated vs. Winbond Electronics Corp | Silicon Integrated vs. Macronix International 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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