Correlation Between GlaxoSmithKline PLC and Hopening
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Hopening 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 Hopening 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 Hopening SA, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Hopening 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 Hopening. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Hopening.
Diversification Opportunities for GlaxoSmithKline PLC and Hopening
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Hopening is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Hopening SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hopening 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 Hopening. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hopening SA has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Hopening go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Hopening
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 10.81 times less return on investment than Hopening. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 1.83 times less risky than Hopening. It trades about 0.01 of its potential returns per unit of risk. Hopening SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 473.00 in Hopening SA on August 26, 2024 and sell it today you would earn a total of 312.00 from holding Hopening SA or generate 65.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.43% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Hopening SA
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Hopening SA |
GlaxoSmithKline PLC and Hopening Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Hopening
The main advantage of trading using opposite GlaxoSmithKline PLC and Hopening positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Hopening 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 Hopening will offset losses from the drop in Hopening'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 |
| Hopening vs. Kaufman Et Broad | Hopening vs. Air France KLM SA | Hopening vs. Metalliance SA | Hopening vs. BEBO Health 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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