Correlation Between GlaxoSmithKline PLC and PV2 Investment
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and PV2 Investment 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 PV2 Investment 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 PV2 Investment JSC, you can compare the effects of market volatilities on GlaxoSmithKline PLC and PV2 Investment 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 PV2 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and PV2 Investment.
Diversification Opportunities for GlaxoSmithKline PLC and PV2 Investment
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and PV2 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and PV2 Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PV2 Investment JSC 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 PV2 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PV2 Investment JSC has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and PV2 Investment go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and PV2 Investment
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the PV2 Investment. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 2.69 times less risky than PV2 Investment. The stock trades about -0.31 of its potential returns per unit of risk. The PV2 Investment JSC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 240,000 in PV2 Investment JSC on August 29, 2024 and sell it today you would earn a total of 0.00 from holding PV2 Investment JSC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. PV2 Investment JSC
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| PV2 Investment JSC |
GlaxoSmithKline PLC and PV2 Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and PV2 Investment
The main advantage of trading using opposite GlaxoSmithKline PLC and PV2 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, PV2 Investment 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 PV2 Investment will offset losses from the drop in PV2 Investment'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 |
| PV2 Investment vs. Pha Lai Thermal | PV2 Investment vs. Techno Agricultural Supplying | PV2 Investment vs. Telecoms Informatics JSC | PV2 Investment vs. Elcom Technology Communications |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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