Correlation Between GlaxoSmithKline PLC and Double Bond
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Double Bond 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 Double Bond 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 Double Bond Chemical, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Double Bond 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 Double Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Double Bond.
Diversification Opportunities for GlaxoSmithKline PLC and Double Bond
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Double is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Double Bond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Double Bond Chemical 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 Double Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Double Bond Chemical has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Double Bond go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Double Bond
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Double Bond. In addition to that, GlaxoSmithKline PLC is 1.01 times more volatile than Double Bond Chemical. It trades about -0.23 of its total potential returns per unit of risk. Double Bond Chemical is currently generating about -0.15 per unit of volatility. If you would invest 4,550 in Double Bond Chemical on September 1, 2024 and sell it today you would lose (190.00) from holding Double Bond Chemical or give up 4.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Double Bond Chemical
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Double Bond Chemical |
GlaxoSmithKline PLC and Double Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Double Bond
The main advantage of trading using opposite GlaxoSmithKline PLC and Double Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Double Bond 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 Double Bond will offset losses from the drop in Double Bond'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 |
| Double Bond vs. Delta Electronics | Double Bond vs. China Steel Chemical | Double Bond vs. Hota Industrial Mfg |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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