Correlation Between GlaxoSmithKline PLC and Sonmez Pamuklu
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sonmez Pamuklu 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 Sonmez Pamuklu 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 Sonmez Pamuklu Sanayii, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sonmez Pamuklu 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 Sonmez Pamuklu. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sonmez Pamuklu.
Diversification Opportunities for GlaxoSmithKline PLC and Sonmez Pamuklu
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Sonmez is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sonmez Pamuklu Sanayii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonmez Pamuklu Sanayii 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 Sonmez Pamuklu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonmez Pamuklu Sanayii has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sonmez Pamuklu go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Sonmez Pamuklu
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Sonmez Pamuklu. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.41 times less risky than Sonmez Pamuklu. The stock trades about -0.3 of its potential returns per unit of risk. The Sonmez Pamuklu Sanayii is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,065 in Sonmez Pamuklu Sanayii on August 28, 2024 and sell it today you would earn a total of 95.00 from holding Sonmez Pamuklu Sanayii or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Sonmez Pamuklu Sanayii
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Sonmez Pamuklu Sanayii |
GlaxoSmithKline PLC and Sonmez Pamuklu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Sonmez Pamuklu
The main advantage of trading using opposite GlaxoSmithKline PLC and Sonmez Pamuklu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sonmez Pamuklu 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 Sonmez Pamuklu will offset losses from the drop in Sonmez Pamuklu'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 |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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