Correlation Between GlaxoSmithKline PLC and BJC Heavy
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and BJC Heavy 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 BJC Heavy 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 BJC Heavy Industries, you can compare the effects of market volatilities on GlaxoSmithKline PLC and BJC Heavy 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 BJC Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and BJC Heavy.
Diversification Opportunities for GlaxoSmithKline PLC and BJC Heavy
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and BJC is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and BJC Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJC Heavy Industries 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 BJC Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJC Heavy Industries has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and BJC Heavy go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and BJC Heavy
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the BJC Heavy. In addition to that, GlaxoSmithKline PLC is 1.09 times more volatile than BJC Heavy Industries. It trades about -0.28 of its total potential returns per unit of risk. BJC Heavy Industries is currently generating about -0.19 per unit of volatility. If you would invest 131.00 in BJC Heavy Industries on August 26, 2024 and sell it today you would lose (7.00) from holding BJC Heavy Industries or give up 5.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. BJC Heavy Industries
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| BJC Heavy Industries |
GlaxoSmithKline PLC and BJC Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and BJC Heavy
The main advantage of trading using opposite GlaxoSmithKline PLC and BJC Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, BJC Heavy 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 BJC Heavy will offset losses from the drop in BJC Heavy'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 |
| BJC Heavy vs. CH Karnchang Public | BJC Heavy vs. Asia Aviation Public | BJC Heavy vs. AAPICO Hitech Public | BJC Heavy vs. GFPT 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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