Correlation Between GlaxoSmithKline PLC and New Advanced
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and New Advanced 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 New Advanced 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 New Advanced Electronics, you can compare the effects of market volatilities on GlaxoSmithKline PLC and New Advanced 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 New Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and New Advanced.
Diversification Opportunities for GlaxoSmithKline PLC and New Advanced
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlaxoSmithKline and New is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and New Advanced Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Advanced 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 New Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Advanced Electronics has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and New Advanced go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and New Advanced
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.6 times more return on investment than New Advanced. However, GlaxoSmithKline PLC ADR is 1.66 times less risky than New Advanced. It trades about 0.01 of its potential returns per unit of risk. New Advanced Electronics is currently generating about -0.03 per unit of risk. If you would invest 3,437 in GlaxoSmithKline PLC ADR on August 29, 2024 and sell it today you would lose (4.00) from holding GlaxoSmithKline PLC ADR or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.59% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. New Advanced Electronics
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| New Advanced Electronics |
GlaxoSmithKline PLC and New Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and New Advanced
The main advantage of trading using opposite GlaxoSmithKline PLC and New Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, New Advanced 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 New Advanced will offset losses from the drop in New Advanced'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 |
| New Advanced vs. Syntek Semiconductor Co | New Advanced vs. Powerchip Semiconductor Manufacturing | New Advanced vs. Realtek Semiconductor Corp | New Advanced vs. FarGlory Hotel 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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