Correlation Between GlaxoSmithKline PLC and Juewei Food

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Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Juewei Food 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 Juewei Food 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 Juewei Food Co, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Juewei Food 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 Juewei Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Juewei Food.

Diversification Opportunities for GlaxoSmithKline PLC and Juewei Food

-0.91
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between GlaxoSmithKline and Juewei is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Juewei Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juewei Food 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 Juewei Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juewei Food has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Juewei Food go up and down completely randomly.

Pair Corralation between GlaxoSmithKline PLC and Juewei Food

Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.47 times more return on investment than Juewei Food. However, GlaxoSmithKline PLC ADR is 2.13 times less risky than Juewei Food. It trades about 0.02 of its potential returns per unit of risk. Juewei Food Co is currently generating about -0.05 per unit of risk. If you would invest  3,273  in GlaxoSmithKline PLC ADR on August 31, 2024 and sell it today you would earn a total of  140.00  from holding GlaxoSmithKline PLC ADR or generate 4.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy95.99%
ValuesDaily Returns

GlaxoSmithKline PLC ADR  vs.  Juewei Food Co

 Performance 
       Timeline  
GlaxoSmithKline PLC ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
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Over the last 90 days GlaxoSmithKline PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Juewei Food 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Juewei Food Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Juewei Food sustained solid returns over the last few months and may actually be approaching a breakup point.

GlaxoSmithKline PLC and Juewei Food Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GlaxoSmithKline PLC and Juewei Food

The main advantage of trading using opposite GlaxoSmithKline PLC and Juewei Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Juewei Food 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 Juewei Food will offset losses from the drop in Juewei Food's long position.
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The idea behind GlaxoSmithKline PLC ADR and Juewei Food Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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