Correlation Between GlaxoSmithKline PLC and Nien Made
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Nien Made 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 Nien Made 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 Nien Made Enterprise, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Nien Made 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 Nien Made. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Nien Made.
Diversification Opportunities for GlaxoSmithKline PLC and Nien Made
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Nien is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Nien Made Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nien Made Enterprise 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 Nien Made. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nien Made Enterprise has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Nien Made go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Nien Made
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.46 times more return on investment than Nien Made. However, GlaxoSmithKline PLC ADR is 2.2 times less risky than Nien Made. It trades about -0.23 of its potential returns per unit of risk. Nien Made Enterprise is currently generating about -0.26 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 | 95.65% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Nien Made Enterprise
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Nien Made Enterprise |
GlaxoSmithKline PLC and Nien Made Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Nien Made
The main advantage of trading using opposite GlaxoSmithKline PLC and Nien Made positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Nien Made 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 Nien Made will offset losses from the drop in Nien Made'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 |
| Nien Made vs. Feng Tay Enterprises | Nien Made vs. Chailease Holding Co | Nien Made vs. Eclat Textile Co | Nien Made vs. Giant Manufacturing Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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