Correlation Between GlaxoSmithKline PLC and Sitronix Technology
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sitronix 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 Sitronix 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 Sitronix Technology Corp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sitronix 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 Sitronix Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sitronix Technology.
Diversification Opportunities for GlaxoSmithKline PLC and Sitronix Technology
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Sitronix is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sitronix Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitronix Technology Corp 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 Sitronix Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitronix Technology Corp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sitronix Technology go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Sitronix Technology
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.94 times more return on investment than Sitronix Technology. However, GlaxoSmithKline PLC ADR is 1.07 times less risky than Sitronix Technology. It trades about -0.23 of its potential returns per unit of risk. Sitronix Technology Corp is currently generating about -0.23 per unit of risk. If you would invest 3,634 in GlaxoSmithKline PLC ADR on September 1, 2024 and sell it today you would lose (221.00) from holding GlaxoSmithKline PLC ADR or give up 6.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Sitronix Technology Corp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Sitronix Technology Corp |
GlaxoSmithKline PLC and Sitronix Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Sitronix Technology
The main advantage of trading using opposite GlaxoSmithKline PLC and Sitronix Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sitronix 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 Sitronix Technology will offset losses from the drop in Sitronix 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 |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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