Correlation Between GlaxoSmithKline PLC and KCI SA
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and KCI SA 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 KCI SA 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 KCI SA, you can compare the effects of market volatilities on GlaxoSmithKline PLC and KCI SA 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 KCI SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and KCI SA.
Diversification Opportunities for GlaxoSmithKline PLC and KCI SA
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and KCI is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and KCI SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCI SA 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 KCI SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCI SA has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and KCI SA go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and KCI SA
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the KCI SA. In addition to that, GlaxoSmithKline PLC is 1.28 times more volatile than KCI SA. It trades about -0.3 of its total potential returns per unit of risk. KCI SA is currently generating about 0.01 per unit of volatility. If you would invest 81.00 in KCI SA on August 30, 2024 and sell it today you would earn a total of 0.00 from holding KCI SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. KCI SA
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| KCI SA |
GlaxoSmithKline PLC and KCI SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and KCI SA
The main advantage of trading using opposite GlaxoSmithKline PLC and KCI SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, KCI SA 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 KCI SA will offset losses from the drop in KCI SA'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 |
| KCI SA vs. Dom Development SA | KCI SA vs. Tower Investments SA | KCI SA vs. Asseco Business Solutions | KCI SA vs. Detalion Games SA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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