Correlation Between GlaxoSmithKline PLC and Klinique Med
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Klinique Med 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 Klinique Med 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 The Klinique Med, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Klinique Med 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 Klinique Med. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Klinique Med.
Diversification Opportunities for GlaxoSmithKline PLC and Klinique Med
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlaxoSmithKline and Klinique is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and The Klinique Med in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klinique Med 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 Klinique Med. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klinique Med has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Klinique Med go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Klinique Med
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Klinique Med. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.57 times less risky than Klinique Med. The stock trades about -0.33 of its potential returns per unit of risk. The The Klinique Med is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 3,200 in The Klinique Med on August 27, 2024 and sell it today you would lose (125.00) from holding The Klinique Med or give up 3.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. The Klinique Med
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Klinique Med |
GlaxoSmithKline PLC and Klinique Med Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Klinique Med
The main advantage of trading using opposite GlaxoSmithKline PLC and Klinique Med positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Klinique Med 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 Klinique Med will offset losses from the drop in Klinique Med'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 |
| Klinique Med vs. Minor International Public | Klinique Med vs. Central Plaza Hotel | Klinique Med vs. The Erawan Group | Klinique Med vs. After You Public |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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