Correlation Between GlaxoSmithKline PLC and Aqua Public
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Aqua Public 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 Aqua Public 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 Aqua Public, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Aqua Public 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 Aqua Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Aqua Public.
Diversification Opportunities for GlaxoSmithKline PLC and Aqua Public
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Aqua is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Aqua Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua 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 Aqua Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Public has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Aqua Public go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Aqua Public
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 197.4 times less return on investment than Aqua Public. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 36.43 times less risky than Aqua Public. It trades about 0.01 of its potential returns per unit of risk. Aqua Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Aqua Public on August 29, 2024 and sell it today you would lose (31.00) from holding Aqua Public or give up 48.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.17% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Aqua Public
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Aqua Public |
GlaxoSmithKline PLC and Aqua Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Aqua Public
The main advantage of trading using opposite GlaxoSmithKline PLC and Aqua Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Aqua Public 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 Aqua Public will offset losses from the drop in Aqua Public'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 |
| Aqua Public vs. Indara Insurance Public | Aqua Public vs. Regional Container Lines | Aqua Public vs. Regional Container Lines | Aqua Public vs. Mahachai Hospital Public |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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