Correlation Between GlaxoSmithKline PLC and Avalue Technology
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Avalue Technology 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 Avalue Technology 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 Avalue Technology, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Avalue Technology 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 Avalue Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Avalue Technology.
Diversification Opportunities for GlaxoSmithKline PLC and Avalue Technology
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Avalue is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Avalue Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalue Technology 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 Avalue Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalue Technology has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Avalue Technology go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Avalue Technology
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 12.73 times less return on investment than Avalue Technology. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 2.02 times less risky than Avalue Technology. It trades about 0.01 of its potential returns per unit of risk. Avalue Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,989 in Avalue Technology on August 29, 2024 and sell it today you would earn a total of 3,951 from holding Avalue Technology or generate 65.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.77% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Avalue Technology
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Avalue Technology |
GlaxoSmithKline PLC and Avalue Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Avalue Technology
The main advantage of trading using opposite GlaxoSmithKline PLC and Avalue Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Avalue Technology 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 Avalue Technology will offset losses from the drop in Avalue Technology'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 |
| Avalue Technology vs. Qisda Corp | Avalue Technology vs. Quanta Computer | Avalue Technology vs. Coretronic | Avalue Technology vs. Wistron Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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