Correlation Between GlaxoSmithKline PLC and MCS Steel
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and MCS Steel 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 MCS Steel 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 MCS Steel Public, you can compare the effects of market volatilities on GlaxoSmithKline PLC and MCS Steel 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 MCS Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and MCS Steel.
Diversification Opportunities for GlaxoSmithKline PLC and MCS Steel
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and MCS is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and MCS Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCS Steel Public 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 MCS Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCS Steel Public has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and MCS Steel go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and MCS Steel
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the MCS Steel. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.23 times less risky than MCS Steel. The stock trades about -0.23 of its potential returns per unit of risk. The MCS Steel Public is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 730.00 in MCS Steel Public on August 31, 2024 and sell it today you would lose (15.00) from holding MCS Steel Public or give up 2.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. MCS Steel Public
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| MCS Steel Public |
GlaxoSmithKline PLC and MCS Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and MCS Steel
The main advantage of trading using opposite GlaxoSmithKline PLC and MCS Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, MCS Steel 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 MCS Steel will offset losses from the drop in MCS Steel'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 |
| MCS Steel vs. Lalin Property Public | MCS Steel vs. Land and Houses | MCS Steel vs. Banpu Public | MCS Steel vs. TISCO Financial Group |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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