Correlation Between GlaxoSmithKline PLC and Huazhu
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Huazhu 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 Huazhu 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 Huazhu Group, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Huazhu 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 Huazhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Huazhu.
Diversification Opportunities for GlaxoSmithKline PLC and Huazhu
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Huazhu is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Huazhu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huazhu Group 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 Huazhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huazhu Group has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Huazhu go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Huazhu
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 5.27 times less return on investment than Huazhu. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 2.07 times less risky than Huazhu. It trades about 0.0 of its potential returns per unit of risk. Huazhu Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 4,070 in Huazhu Group on August 27, 2024 and sell it today you would lose (490.00) from holding Huazhu Group or give up 12.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Huazhu Group
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Huazhu Group |
GlaxoSmithKline PLC and Huazhu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Huazhu
The main advantage of trading using opposite GlaxoSmithKline PLC and Huazhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Huazhu 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 Huazhu will offset losses from the drop in Huazhu'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 |
| Huazhu vs. GreenTree Hospitality Group | Huazhu vs. Soho House Co | Huazhu vs. InterContinental Hotels Group | Huazhu vs. The Intergroup |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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