Correlation Between GlaxoSmithKline PLC and Compaa Minera

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Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Compaa Minera 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 Compaa Minera 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 Compaa Minera Autln, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Compaa Minera 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 Compaa Minera. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Compaa Minera.

Diversification Opportunities for GlaxoSmithKline PLC and Compaa Minera

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between GlaxoSmithKline and Compaa is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Compaa Minera Autln in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compaa Minera Autln 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 Compaa Minera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compaa Minera Autln has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Compaa Minera go up and down completely randomly.

Pair Corralation between GlaxoSmithKline PLC and Compaa Minera

Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.68 times more return on investment than Compaa Minera. However, GlaxoSmithKline PLC ADR is 1.48 times less risky than Compaa Minera. It trades about 0.01 of its potential returns per unit of risk. Compaa Minera Autln is currently generating about -0.05 per unit of risk. If you would invest  3,251  in GlaxoSmithKline PLC ADR on August 26, 2024 and sell it today you would earn a total of  119.00  from holding GlaxoSmithKline PLC ADR or generate 3.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

GlaxoSmithKline PLC ADR  vs.  Compaa Minera Autln

 Performance 
       Timeline  
GlaxoSmithKline PLC ADR 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days GlaxoSmithKline PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Compaa Minera Autln 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Compaa Minera Autln has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Compaa Minera is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

GlaxoSmithKline PLC and Compaa Minera Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GlaxoSmithKline PLC and Compaa Minera

The main advantage of trading using opposite GlaxoSmithKline PLC and Compaa Minera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Compaa Minera 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 Compaa Minera will offset losses from the drop in Compaa Minera's long position.
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The idea behind GlaxoSmithKline PLC ADR and Compaa Minera Autln pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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