Correlation Between GlaxoSmithKline PLC and Alpha Technology
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Alpha 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 Alpha 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 Alpha Technology Group, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Alpha 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 Alpha Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Alpha Technology.
Diversification Opportunities for GlaxoSmithKline PLC and Alpha Technology
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Alpha is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Alpha Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Technology 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 Alpha Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Technology has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Alpha Technology go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Alpha Technology
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Alpha Technology. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 10.05 times less risky than Alpha Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Alpha Technology Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 399.00 in Alpha Technology Group on August 30, 2024 and sell it today you would earn a total of 1,047 from holding Alpha Technology Group or generate 262.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Alpha Technology Group
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Alpha Technology |
GlaxoSmithKline PLC and Alpha Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Alpha Technology
The main advantage of trading using opposite GlaxoSmithKline PLC and Alpha Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Alpha 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 Alpha Technology will offset losses from the drop in Alpha 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 |
| Alpha Technology vs. Minerals Technologies | Alpha Technology vs. JD Sports Fashion | Alpha Technology vs. Valneva SE ADR | Alpha Technology vs. NETGEAR |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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