Correlation Between GlaxoSmithKline PLC and Avanceon
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Avanceon 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 Avanceon 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 Avanceon, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Avanceon 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 Avanceon. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Avanceon.
Diversification Opportunities for GlaxoSmithKline PLC and Avanceon
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Avanceon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Avanceon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanceon 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 Avanceon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanceon has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Avanceon go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Avanceon
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Avanceon. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.4 times less risky than Avanceon. The stock trades about -0.25 of its potential returns per unit of risk. The Avanceon is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 5,949 in Avanceon on August 29, 2024 and sell it today you would lose (817.00) from holding Avanceon or give up 13.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Avanceon
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Avanceon |
GlaxoSmithKline PLC and Avanceon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Avanceon
The main advantage of trading using opposite GlaxoSmithKline PLC and Avanceon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Avanceon 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 Avanceon will offset losses from the drop in Avanceon'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 |
| Avanceon vs. Engro Polymer Chemicals | Avanceon vs. Ghani Chemical Industries | Avanceon vs. Hi Tech Lubricants | Avanceon vs. Unity Foods |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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