Correlation Between GlaxoSmithKline PLC and Genesis Technology
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Genesis Technology 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 Genesis Technology 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 Genesis Technology, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Genesis Technology 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 Genesis Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Genesis Technology.
Diversification Opportunities for GlaxoSmithKline PLC and Genesis Technology
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Genesis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Genesis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Technology 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 Genesis Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Technology has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Genesis Technology go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Genesis Technology
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Genesis Technology. In addition to that, GlaxoSmithKline PLC is 6.15 times more volatile than Genesis Technology. It trades about -0.33 of its total potential returns per unit of risk. Genesis Technology is currently generating about -0.25 per unit of volatility. If you would invest 6,660 in Genesis Technology on August 27, 2024 and sell it today you would lose (80.00) from holding Genesis Technology or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Genesis Technology
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Genesis Technology |
GlaxoSmithKline PLC and Genesis Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Genesis Technology
The main advantage of trading using opposite GlaxoSmithKline PLC and Genesis Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Genesis Technology 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 Genesis Technology will offset losses from the drop in Genesis Technology'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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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