Correlation Between GlaxoSmithKline PLC and Guinness Atkinson
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Guinness Atkinson 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 Guinness Atkinson 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 Guinness Atkinson China, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Guinness Atkinson 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 Guinness Atkinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Guinness Atkinson.
Diversification Opportunities for GlaxoSmithKline PLC and Guinness Atkinson
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Guinness is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Guinness Atkinson China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson China 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 Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson China has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Guinness Atkinson go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Guinness Atkinson
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Guinness Atkinson. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.03 times less risky than Guinness Atkinson. The stock trades about -0.31 of its potential returns per unit of risk. The Guinness Atkinson China is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 1,366 in Guinness Atkinson China on August 26, 2024 and sell it today you would lose (98.00) from holding Guinness Atkinson China or give up 7.17% 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. Guinness Atkinson China
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Guinness Atkinson China |
GlaxoSmithKline PLC and Guinness Atkinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Guinness Atkinson
The main advantage of trading using opposite GlaxoSmithKline PLC and Guinness Atkinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Guinness Atkinson 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 Guinness Atkinson will offset losses from the drop in Guinness Atkinson'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 |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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