Correlation Between GlaxoSmithKline PLC and Cardio Diagnostics
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Cardio Diagnostics 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 Cardio Diagnostics 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 Cardio Diagnostics Holdings, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Cardio Diagnostics 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 Cardio Diagnostics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Cardio Diagnostics.
Diversification Opportunities for GlaxoSmithKline PLC and Cardio Diagnostics
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Cardio is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Cardio Diagnostics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardio Diagnostics 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 Cardio Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardio Diagnostics has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Cardio Diagnostics go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Cardio Diagnostics
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Cardio Diagnostics. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 13.87 times less risky than Cardio Diagnostics. The stock trades about -0.31 of its potential returns per unit of risk. The Cardio Diagnostics Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3.23 in Cardio Diagnostics Holdings on August 29, 2024 and sell it today you would earn a total of 0.67 from holding Cardio Diagnostics Holdings or generate 20.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Cardio Diagnostics Holdings
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Cardio Diagnostics |
GlaxoSmithKline PLC and Cardio Diagnostics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Cardio Diagnostics
The main advantage of trading using opposite GlaxoSmithKline PLC and Cardio Diagnostics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Cardio Diagnostics 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 Cardio Diagnostics will offset losses from the drop in Cardio Diagnostics' 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 |
| Cardio Diagnostics vs. Eliem Therapeutics | Cardio Diagnostics vs. Scpharmaceuticals | Cardio Diagnostics vs. Milestone Pharmaceuticals | Cardio Diagnostics vs. Seres Therapeutics |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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