Correlation Between GlaxoSmithKline PLC and Great Wall
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Great Wall 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 Great Wall 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 Great Wall Motor, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Great Wall 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 Great Wall. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Great Wall.
Diversification Opportunities for GlaxoSmithKline PLC and Great Wall
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Great is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Great Wall Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wall Motor 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 Great Wall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wall Motor has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Great Wall go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Great Wall
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 9.86 times less return on investment than Great Wall. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 2.74 times less risky than Great Wall. It trades about 0.02 of its potential returns per unit of risk. Great Wall Motor is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,041 in Great Wall Motor on August 31, 2024 and sell it today you would earn a total of 604.00 from holding Great Wall Motor or generate 58.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.58% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Great Wall Motor
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Great Wall Motor |
GlaxoSmithKline PLC and Great Wall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Great Wall
The main advantage of trading using opposite GlaxoSmithKline PLC and Great Wall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Great Wall 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 Great Wall will offset losses from the drop in Great Wall'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 |
| Great Wall vs. Mullen Automotive | Great Wall vs. Tesla Inc | Great Wall vs. Ford Motor | Great Wall vs. Nio Class 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 Stocks Directory module to find actively traded stocks across global markets.
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