Correlation Between GlaxoSmithKline PLC and Magyar Telekom
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Magyar Telekom 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 Magyar Telekom 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 Magyar Telekom PLC, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Magyar Telekom 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 Magyar Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Magyar Telekom.
Diversification Opportunities for GlaxoSmithKline PLC and Magyar Telekom
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Magyar is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Magyar Telekom PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Telekom PLC 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 Magyar Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Telekom PLC has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Magyar Telekom go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Magyar Telekom
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Magyar Telekom. In addition to that, GlaxoSmithKline PLC is 1.27 times more volatile than Magyar Telekom PLC. It trades about -0.31 of its total potential returns per unit of risk. Magyar Telekom PLC is currently generating about 0.63 per unit of volatility. If you would invest 107,800 in Magyar Telekom PLC on August 26, 2024 and sell it today you would earn a total of 16,600 from holding Magyar Telekom PLC or generate 15.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Magyar Telekom PLC
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Magyar Telekom PLC |
GlaxoSmithKline PLC and Magyar Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Magyar Telekom
The main advantage of trading using opposite GlaxoSmithKline PLC and Magyar Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Magyar Telekom 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 Magyar Telekom will offset losses from the drop in Magyar Telekom'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 |
| Magyar Telekom vs. Commerzbank AG | Magyar Telekom vs. OTP Bank Nyrt | Magyar Telekom vs. NordTelekom Telecommunications Service | Magyar Telekom vs. Nutex Investments PLC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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