Correlation Between GlaxoSmithKline PLC and Ambu A/S
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Ambu A/S 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 Ambu A/S 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 Ambu AS, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Ambu A/S 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 Ambu A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Ambu A/S.
Diversification Opportunities for GlaxoSmithKline PLC and Ambu A/S
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Ambu is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Ambu AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambu A/S 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 Ambu A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambu A/S has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Ambu A/S go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Ambu A/S
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 8.73 times less return on investment than Ambu A/S. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 2.14 times less risky than Ambu A/S. It trades about 0.01 of its potential returns per unit of risk. Ambu AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,213 in Ambu AS on August 26, 2024 and sell it today you would earn a total of 777.00 from holding Ambu AS or generate 64.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Ambu AS
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Ambu A/S |
GlaxoSmithKline PLC and Ambu A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Ambu A/S
The main advantage of trading using opposite GlaxoSmithKline PLC and Ambu A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Ambu A/S 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 Ambu A/S will offset losses from the drop in Ambu A/S'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 |
| Ambu A/S vs. Rezolute | Ambu A/S vs. Tempest Therapeutics | Ambu A/S vs. Forte Biosciences | Ambu A/S vs. Dyadic 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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