Correlation Between GlaxoSmithKline PLC and HSBC UK
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and HSBC UK 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 HSBC UK 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 HSBC UK SUS, you can compare the effects of market volatilities on GlaxoSmithKline PLC and HSBC UK 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 HSBC UK. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and HSBC UK.
Diversification Opportunities for GlaxoSmithKline PLC and HSBC UK
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and HSBC is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and HSBC UK SUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC UK SUS 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 HSBC UK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC UK SUS has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and HSBC UK go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and HSBC UK
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the HSBC UK. In addition to that, GlaxoSmithKline PLC is 1.29 times more volatile than HSBC UK SUS. It trades about -0.23 of its total potential returns per unit of risk. HSBC UK SUS is currently generating about 0.09 per unit of volatility. If you would invest 2,163 in HSBC UK SUS on August 31, 2024 and sell it today you would earn a total of 38.00 from holding HSBC UK SUS or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. HSBC UK SUS
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| HSBC UK SUS |
GlaxoSmithKline PLC and HSBC UK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and HSBC UK
The main advantage of trading using opposite GlaxoSmithKline PLC and HSBC UK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, HSBC UK 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 HSBC UK will offset losses from the drop in HSBC UK'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 |
| HSBC UK vs. HSBC MSCI China | HSBC UK vs. HSBC Emerging Market | HSBC UK vs. HSBC USA Sustainable | HSBC UK vs. HSBC MSCI Japan |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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