Correlation Between GlaxoSmithKline PLC and Shinhan Inverse
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Shinhan Inverse 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 Shinhan Inverse 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 Shinhan Inverse Copper, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Shinhan Inverse 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 Shinhan Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Shinhan Inverse.
Diversification Opportunities for GlaxoSmithKline PLC and Shinhan Inverse
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Shinhan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Shinhan Inverse Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Inverse Copper 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 Shinhan Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Inverse Copper has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Shinhan Inverse go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Shinhan Inverse
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Shinhan Inverse. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.11 times less risky than Shinhan Inverse. The stock trades about -0.23 of its potential returns per unit of risk. The Shinhan Inverse Copper is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 532,000 in Shinhan Inverse Copper on September 1, 2024 and sell it today you would earn a total of 33,000 from holding Shinhan Inverse Copper or generate 6.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Shinhan Inverse Copper
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Shinhan Inverse Copper |
GlaxoSmithKline PLC and Shinhan Inverse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Shinhan Inverse
The main advantage of trading using opposite GlaxoSmithKline PLC and Shinhan Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Shinhan Inverse 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 Shinhan Inverse will offset losses from the drop in Shinhan Inverse'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 |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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