Correlation Between GlaxoSmithKline PLC and Asia Precision
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Asia Precision 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 Asia Precision 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 Asia Precision Public, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Asia Precision 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 Asia Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Asia Precision.
Diversification Opportunities for GlaxoSmithKline PLC and Asia Precision
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Asia is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Asia Precision Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Precision Public 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 Asia Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Precision Public has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Asia Precision go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Asia Precision
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 115.65 times less return on investment than Asia Precision. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 40.17 times less risky than Asia Precision. It trades about 0.02 of its potential returns per unit of risk. Asia Precision Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 422.00 in Asia Precision Public on August 31, 2024 and sell it today you would lose (235.00) from holding Asia Precision Public or give up 55.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.33% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Asia Precision Public
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Asia Precision Public |
GlaxoSmithKline PLC and Asia Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Asia Precision
The main advantage of trading using opposite GlaxoSmithKline PLC and Asia Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Asia Precision 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 Asia Precision will offset losses from the drop in Asia Precision'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 |
| Asia Precision vs. Gulf Energy Development | Asia Precision vs. Energy Absolute Public | Asia Precision vs. WHA Public | Asia Precision vs. Bangkok Expressway and |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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