Correlation Between GlaxoSmithKline PLC and Everlight Electronics
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Everlight Electronics 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 Everlight Electronics 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 Everlight Electronics Co, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Everlight Electronics 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 Everlight Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Everlight Electronics.
Diversification Opportunities for GlaxoSmithKline PLC and Everlight Electronics
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GlaxoSmithKline and Everlight is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Everlight Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Electronics 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 Everlight Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Electronics has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Everlight Electronics go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Everlight Electronics
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Everlight Electronics. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.53 times less risky than Everlight Electronics. The stock trades about -0.06 of its potential returns per unit of risk. The Everlight Electronics Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,000 in Everlight Electronics Co on August 27, 2024 and sell it today you would earn a total of 2,890 from holding Everlight Electronics Co or generate 57.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Everlight Electronics Co
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Everlight Electronics |
GlaxoSmithKline PLC and Everlight Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Everlight Electronics
The main advantage of trading using opposite GlaxoSmithKline PLC and Everlight Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Everlight Electronics 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 Everlight Electronics will offset losses from the drop in Everlight Electronics' 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 |
| Everlight Electronics vs. Novatek Microelectronics Corp | Everlight Electronics vs. Quanta Computer | Everlight Electronics vs. United Microelectronics |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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