Correlation Between GlaxoSmithKline PLC and Seah Steel
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Seah Steel 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 Seah Steel 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 Seah Steel Corp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Seah Steel 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 Seah Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Seah Steel.
Diversification Opportunities for GlaxoSmithKline PLC and Seah Steel
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Seah is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp 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 Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Seah Steel go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Seah Steel
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Seah Steel. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.54 times less risky than Seah Steel. The stock trades about -0.23 of its potential returns per unit of risk. The Seah Steel Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11,380,000 in Seah Steel Corp on September 1, 2024 and sell it today you would earn a total of 280,000 from holding Seah Steel Corp or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Seah Steel Corp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Seah Steel Corp |
GlaxoSmithKline PLC and Seah Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Seah Steel
The main advantage of trading using opposite GlaxoSmithKline PLC and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Seah Steel 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 Seah Steel will offset losses from the drop in Seah Steel'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 |
| Seah Steel vs. Semyung Electric Machinery | Seah Steel vs. Shinsegae Engineering Construction | Seah Steel vs. Daedong Metals Co | Seah Steel vs. KEPCO Engineering Construction |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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