Correlation Between GlaxoSmithKline PLC and Ibase Gaming
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Ibase Gaming 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 Ibase Gaming 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 Ibase Gaming, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Ibase Gaming 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 Ibase Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Ibase Gaming.
Diversification Opportunities for GlaxoSmithKline PLC and Ibase Gaming
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Ibase is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Ibase Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibase Gaming 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 Ibase Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibase Gaming has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Ibase Gaming go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Ibase Gaming
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.53 times more return on investment than Ibase Gaming. However, GlaxoSmithKline PLC ADR is 1.9 times less risky than Ibase Gaming. It trades about -0.23 of its potential returns per unit of risk. Ibase Gaming is currently generating about -0.17 per unit of risk. If you would invest 3,659 in GlaxoSmithKline PLC ADR on August 31, 2024 and sell it today you would lose (226.00) from holding GlaxoSmithKline PLC ADR or give up 6.18% 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. Ibase Gaming
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Ibase Gaming |
GlaxoSmithKline PLC and Ibase Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Ibase Gaming
The main advantage of trading using opposite GlaxoSmithKline PLC and Ibase Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Ibase Gaming 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 Ibase Gaming will offset losses from the drop in Ibase Gaming'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 |
| Ibase Gaming vs. Silicon Power Computer | Ibase Gaming vs. Universal Vision Biotechnology | Ibase Gaming vs. TWOWAY Communications | Ibase Gaming vs. Loop Telecommunication International |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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