Correlation Between GlaxoSmithKline PLC and AP Møller
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and AP Møller 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 AP Møller 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 AP Mller , you can compare the effects of market volatilities on GlaxoSmithKline PLC and AP Møller 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 AP Møller. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and AP Møller.
Diversification Opportunities for GlaxoSmithKline PLC and AP Møller
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and DP4A is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Møller 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 AP Møller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Møller has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and AP Møller go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and AP Møller
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the AP Møller. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.81 times less risky than AP Møller. The stock trades about -0.26 of its potential returns per unit of risk. The AP Mller is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 144,500 in AP Mller on August 25, 2024 and sell it today you would earn a total of 8,600 from holding AP Mller or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. AP Mller
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| AP Møller |
GlaxoSmithKline PLC and AP Møller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and AP Møller
The main advantage of trading using opposite GlaxoSmithKline PLC and AP Møller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, AP Møller 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 AP Møller will offset losses from the drop in AP Møller'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 |
| AP Møller vs. Superior Plus Corp | AP Møller vs. NMI Holdings | AP Møller vs. Origin Agritech | AP Møller vs. SIVERS SEMICONDUCTORS AB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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