Correlation Between GlaxoSmithKline PLC and Chailease Holding
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Chailease Holding 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 Chailease Holding 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 Chailease Holding Co, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Chailease Holding 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 Chailease Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Chailease Holding.
Diversification Opportunities for GlaxoSmithKline PLC and Chailease Holding
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Chailease is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Chailease Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chailease Holding 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 Chailease Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chailease Holding has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Chailease Holding go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Chailease Holding
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.65 times more return on investment than Chailease Holding. However, GlaxoSmithKline PLC ADR is 1.54 times less risky than Chailease Holding. It trades about -0.08 of its potential returns per unit of risk. Chailease Holding Co is currently generating about -0.09 per unit of risk. If you would invest 4,004 in GlaxoSmithKline PLC ADR on August 31, 2024 and sell it today you would lose (591.00) from holding GlaxoSmithKline PLC ADR or give up 14.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Chailease Holding Co
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Chailease Holding |
GlaxoSmithKline PLC and Chailease Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Chailease Holding
The main advantage of trading using opposite GlaxoSmithKline PLC and Chailease Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Chailease Holding 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 Chailease Holding will offset losses from the drop in Chailease Holding'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 |
| Chailease Holding vs. Central Reinsurance Corp | Chailease Holding vs. Huaku Development Co | Chailease Holding vs. Fubon Financial Holding | Chailease Holding vs. CTBC Financial Holding |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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