Correlation Between GlaxoSmithKline PLC and Klaria Pharma
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Klaria Pharma 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 Klaria Pharma 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 Klaria Pharma Holding, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Klaria Pharma 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 Klaria Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Klaria Pharma.
Diversification Opportunities for GlaxoSmithKline PLC and Klaria Pharma
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Klaria is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Klaria Pharma Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klaria Pharma Holding 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 Klaria Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klaria Pharma Holding has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Klaria Pharma go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Klaria Pharma
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 5.34 times less return on investment than Klaria Pharma. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 6.13 times less risky than Klaria Pharma. It trades about 0.01 of its potential returns per unit of risk. Klaria Pharma Holding is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 130.00 in Klaria Pharma Holding on August 25, 2024 and sell it today you would lose (90.00) from holding Klaria Pharma Holding or give up 69.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Klaria Pharma Holding
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Klaria Pharma Holding |
GlaxoSmithKline PLC and Klaria Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Klaria Pharma
The main advantage of trading using opposite GlaxoSmithKline PLC and Klaria Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Klaria Pharma 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 Klaria Pharma will offset losses from the drop in Klaria Pharma'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 |
| Klaria Pharma vs. Stille AB | Klaria Pharma vs. Midsona AB | Klaria Pharma vs. C Rad AB | Klaria Pharma vs. Novotek AB |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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