Correlation Between GlaxoSmithKline PLC and Jinhua Capital
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Jinhua Capital 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 Jinhua Capital 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 Jinhua Capital, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Jinhua Capital 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 Jinhua Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Jinhua Capital.
Diversification Opportunities for GlaxoSmithKline PLC and Jinhua Capital
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Jinhua is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Jinhua Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinhua Capital 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 Jinhua Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinhua Capital has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Jinhua Capital go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Jinhua Capital
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Jinhua Capital. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 24.9 times less risky than Jinhua Capital. The stock trades about -0.3 of its potential returns per unit of risk. The Jinhua Capital is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Jinhua Capital on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Jinhua Capital or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Jinhua Capital
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Jinhua Capital |
GlaxoSmithKline PLC and Jinhua Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Jinhua Capital
The main advantage of trading using opposite GlaxoSmithKline PLC and Jinhua Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Jinhua Capital 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 Jinhua Capital will offset losses from the drop in Jinhua Capital'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 |
| Jinhua Capital vs. American Hotel Income | Jinhua Capital vs. Champion Iron | Jinhua Capital vs. Falcon Energy Materials | Jinhua Capital vs. Algonquin Power Utilities |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |