Correlation Between GlaxoSmithKline PLC and Samhi Hotels
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Samhi Hotels 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 Samhi Hotels 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 Samhi Hotels Limited, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Samhi Hotels 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 Samhi Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Samhi Hotels.
Diversification Opportunities for GlaxoSmithKline PLC and Samhi Hotels
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlaxoSmithKline and Samhi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Samhi Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhi Hotels Limited 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 Samhi Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhi Hotels Limited has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Samhi Hotels go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Samhi Hotels
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Samhi Hotels. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.52 times less risky than Samhi Hotels. The stock trades about -0.3 of its potential returns per unit of risk. The Samhi Hotels Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 18,688 in Samhi Hotels Limited on August 25, 2024 and sell it today you would lose (385.00) from holding Samhi Hotels Limited or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Samhi Hotels Limited
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Samhi Hotels Limited |
GlaxoSmithKline PLC and Samhi Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Samhi Hotels
The main advantage of trading using opposite GlaxoSmithKline PLC and Samhi Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Samhi Hotels 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 Samhi Hotels will offset losses from the drop in Samhi Hotels' 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 |
| Samhi Hotels vs. Reliance Communications Limited | Samhi Hotels vs. Chalet Hotels Limited | Samhi Hotels vs. DiGiSPICE Technologies Limited | Samhi Hotels vs. SINCLAIRS HOTELS ORD |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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