Correlation Between GlaxoSmithKline PLC and Oando PLC
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Oando PLC 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 Oando PLC 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 Oando PLC, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Oando PLC 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 Oando PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Oando PLC.
Diversification Opportunities for GlaxoSmithKline PLC and Oando PLC
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Oando is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Oando PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oando 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 Oando PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oando PLC has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Oando PLC go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Oando PLC
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 94.27 times less return on investment than Oando PLC. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 11.2 times less risky than Oando PLC. It trades about 0.01 of its potential returns per unit of risk. Oando PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,300 in Oando PLC on August 31, 2024 and sell it today you would earn a total of 1,700 from holding Oando PLC or generate 130.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Oando PLC
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Oando PLC |
GlaxoSmithKline PLC and Oando PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Oando PLC
The main advantage of trading using opposite GlaxoSmithKline PLC and Oando PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Oando PLC 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 Oando PLC will offset losses from the drop in Oando PLC'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 |
| Oando PLC vs. Reinet Investments SCA | Oando PLC vs. African Media Entertainment | Oando PLC vs. Zeder Investments | Oando PLC vs. Capitec Bank Holdings |
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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