Correlation Between GlaxoSmithKline PLC and Pioneerindo Gourmet
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Pioneerindo Gourmet 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 Pioneerindo Gourmet 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 Pioneerindo Gourmet International, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Pioneerindo Gourmet 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 Pioneerindo Gourmet. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Pioneerindo Gourmet.
Diversification Opportunities for GlaxoSmithKline PLC and Pioneerindo Gourmet
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Pioneerindo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Pioneerindo Gourmet Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneerindo Gourmet 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 Pioneerindo Gourmet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneerindo Gourmet has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Pioneerindo Gourmet go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Pioneerindo Gourmet
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.21 times more return on investment than Pioneerindo Gourmet. However, GlaxoSmithKline PLC ADR is 4.72 times less risky than Pioneerindo Gourmet. It trades about 0.0 of its potential returns per unit of risk. Pioneerindo Gourmet International is currently generating about -0.08 per unit of risk. If you would invest 3,414 in GlaxoSmithKline PLC ADR on August 25, 2024 and sell it today you would lose (44.00) from holding GlaxoSmithKline PLC ADR or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.4% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Pioneerindo Gourmet Internatio
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Pioneerindo Gourmet |
GlaxoSmithKline PLC and Pioneerindo Gourmet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Pioneerindo Gourmet
The main advantage of trading using opposite GlaxoSmithKline PLC and Pioneerindo Gourmet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Pioneerindo Gourmet 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 Pioneerindo Gourmet will offset losses from the drop in Pioneerindo Gourmet'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 |
| Pioneerindo Gourmet vs. PT Dewi Shri | Pioneerindo Gourmet vs. Bangun Karya Perkasa | Pioneerindo Gourmet vs. Gaya Abadi Sempurna | Pioneerindo Gourmet vs. Habco Trans Maritima |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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