Correlation Between GlaxoSmithKline PLC and Desenio Group
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Desenio Group 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 Desenio Group 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 Desenio Group AB, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Desenio Group 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 Desenio Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Desenio Group.
Diversification Opportunities for GlaxoSmithKline PLC and Desenio Group
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Desenio is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Desenio Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desenio Group AB 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 Desenio Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desenio Group AB has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Desenio Group go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Desenio Group
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Desenio Group. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 10.31 times less risky than Desenio Group. The stock trades about -0.3 of its potential returns per unit of risk. The Desenio Group AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Desenio Group AB on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Desenio Group AB or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Desenio Group AB
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Desenio Group AB |
GlaxoSmithKline PLC and Desenio Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Desenio Group
The main advantage of trading using opposite GlaxoSmithKline PLC and Desenio Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Desenio Group 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 Desenio Group will offset losses from the drop in Desenio Group'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 |
| Desenio Group vs. Rugvista Group AB | Desenio Group vs. Cint Group AB | Desenio Group vs. BHG Group AB | Desenio Group vs. Lyko Group A |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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