Correlation Between GlaxoSmithKline PLC and Sun Pacific
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sun Pacific 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 Sun Pacific 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 Sun Pacific Holding, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sun Pacific 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 Sun Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sun Pacific.
Diversification Opportunities for GlaxoSmithKline PLC and Sun Pacific
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GlaxoSmithKline and Sun is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sun Pacific Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Pacific Holding 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 Sun Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Pacific Holding has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sun Pacific go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Sun Pacific
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Sun Pacific. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 12.86 times less risky than Sun Pacific. The stock trades about -0.03 of its potential returns per unit of risk. The Sun Pacific Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,840 in Sun Pacific Holding on August 28, 2024 and sell it today you would lose (1,627) from holding Sun Pacific Holding or give up 88.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Sun Pacific Holding
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Sun Pacific Holding |
GlaxoSmithKline PLC and Sun Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Sun Pacific
The main advantage of trading using opposite GlaxoSmithKline PLC and Sun Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sun Pacific 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 Sun Pacific will offset losses from the drop in Sun Pacific'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 |
| Sun Pacific vs. Global Payout | Sun Pacific vs. CMG Holdings Group | Sun Pacific vs. Fluent Inc | Sun Pacific vs. Marchex |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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