Correlation Between GlaxoSmithKline PLC and Cellink AB
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Cellink AB 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 Cellink AB 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 Cellink AB, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Cellink AB 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 Cellink AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Cellink AB.
Diversification Opportunities for GlaxoSmithKline PLC and Cellink AB
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlaxoSmithKline and Cellink is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Cellink AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellink AB 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 Cellink AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellink AB has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Cellink AB go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Cellink AB
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Cellink AB. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 3.43 times less risky than Cellink AB. The stock trades about -0.3 of its potential returns per unit of risk. The Cellink AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 348.00 in Cellink AB on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Cellink AB or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Cellink AB
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Cellink AB |
GlaxoSmithKline PLC and Cellink AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Cellink AB
The main advantage of trading using opposite GlaxoSmithKline PLC and Cellink AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Cellink AB 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 Cellink AB will offset losses from the drop in Cellink AB'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 |
| Cellink AB vs. Superior Plus Corp | Cellink AB vs. NMI Holdings | Cellink AB vs. Origin Agritech | Cellink AB vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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