Correlation Between GlaxoSmithKline PLC and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Singapore Airlines 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 Singapore Airlines 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 Singapore Airlines, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Singapore Airlines.
Diversification Opportunities for GlaxoSmithKline PLC and Singapore Airlines
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Singapore is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Singapore Airlines go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Singapore Airlines
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Singapore Airlines. In addition to that, GlaxoSmithKline PLC is 1.23 times more volatile than Singapore Airlines. It trades about -0.3 of its total potential returns per unit of risk. Singapore Airlines is currently generating about -0.13 per unit of volatility. If you would invest 970.00 in Singapore Airlines on August 29, 2024 and sell it today you would lose (31.00) from holding Singapore Airlines or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Singapore Airlines
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Singapore Airlines |
GlaxoSmithKline PLC and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Singapore Airlines
The main advantage of trading using opposite GlaxoSmithKline PLC and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' 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 |
| Singapore Airlines vs. Finnair Oyj | Singapore Airlines vs. easyJet plc | Singapore Airlines vs. Norse Atlantic ASA | Singapore Airlines vs. Air China Limited |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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