Correlation Between GlaxoSmithKline PLC and High Coast

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Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and High Coast 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 High Coast 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 High Coast Distillery, you can compare the effects of market volatilities on GlaxoSmithKline PLC and High Coast 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 High Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and High Coast.

Diversification Opportunities for GlaxoSmithKline PLC and High Coast

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between GlaxoSmithKline and High is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and High Coast Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Coast Distillery 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 High Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Coast Distillery has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and High Coast go up and down completely randomly.

Pair Corralation between GlaxoSmithKline PLC and High Coast

Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 15.53 times less return on investment than High Coast. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 2.27 times less risky than High Coast. It trades about 0.0 of its potential returns per unit of risk. High Coast Distillery is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,660  in High Coast Distillery on August 26, 2024 and sell it today you would lose (260.00) from holding High Coast Distillery or give up 5.58% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

GlaxoSmithKline PLC ADR  vs.  High Coast Distillery

 Performance 
       Timeline  
GlaxoSmithKline PLC ADR 

Risk-Adjusted Performance

0 of 100

 
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Very Weak
Over the last 90 days GlaxoSmithKline PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
High Coast Distillery 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in High Coast Distillery are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, High Coast is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

GlaxoSmithKline PLC and High Coast Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GlaxoSmithKline PLC and High Coast

The main advantage of trading using opposite GlaxoSmithKline PLC and High Coast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, High Coast 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 High Coast will offset losses from the drop in High Coast's long position.
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The idea behind GlaxoSmithKline PLC ADR and High Coast Distillery pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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