Correlation Between GlaxoSmithKline PLC and Biovaxys Technology
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Biovaxys 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 Biovaxys 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 Biovaxys Technology Corp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Biovaxys 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 Biovaxys Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Biovaxys Technology.
Diversification Opportunities for GlaxoSmithKline PLC and Biovaxys Technology
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Biovaxys is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Biovaxys Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biovaxys Technology Corp 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 Biovaxys Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biovaxys Technology Corp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Biovaxys Technology go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Biovaxys Technology
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 24.04 times less return on investment than Biovaxys Technology. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 9.46 times less risky than Biovaxys Technology. It trades about 0.02 of its potential returns per unit of risk. Biovaxys Technology Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8.79 in Biovaxys Technology Corp on August 31, 2024 and sell it today you would lose (4.29) from holding Biovaxys Technology Corp or give up 48.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Biovaxys Technology Corp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Biovaxys Technology Corp |
GlaxoSmithKline PLC and Biovaxys Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Biovaxys Technology
The main advantage of trading using opposite GlaxoSmithKline PLC and Biovaxys Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Biovaxys 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 Biovaxys Technology will offset losses from the drop in Biovaxys 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 |
| Biovaxys Technology vs. Rigel Pharmaceuticals | Biovaxys Technology vs. Geron | Biovaxys Technology vs. Verastem | Biovaxys Technology vs. Immutep Ltd ADR |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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