Correlation Between GlaxoSmithKline PLC and Kings Town
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Kings Town 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 Kings Town 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 Kings Town Bank, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Kings Town 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 Kings Town. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Kings Town.
Diversification Opportunities for GlaxoSmithKline PLC and Kings Town
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Kings is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Kings Town Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kings Town Bank 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 Kings Town. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kings Town Bank has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Kings Town go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Kings Town
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Kings Town. In addition to that, GlaxoSmithKline PLC is 1.0 times more volatile than Kings Town Bank. It trades about -0.31 of its total potential returns per unit of risk. Kings Town Bank is currently generating about 0.04 per unit of volatility. If you would invest 5,010 in Kings Town Bank on August 29, 2024 and sell it today you would earn a total of 50.00 from holding Kings Town Bank or generate 1.0% 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. Kings Town Bank
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Kings Town Bank |
GlaxoSmithKline PLC and Kings Town Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Kings Town
The main advantage of trading using opposite GlaxoSmithKline PLC and Kings Town positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Kings Town 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 Kings Town will offset losses from the drop in Kings Town'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 |
| Kings Town vs. Taichung Commercial Bank | Kings Town vs. Far Eastern International | Kings Town vs. Taiwan Business Bank | Kings Town vs. Sinopac Financial Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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