Correlation Between GlaxoSmithKline PLC and Sun Hung
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sun Hung 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 Hung 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 Hung Kai, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sun Hung 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 Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sun Hung.
Diversification Opportunities for GlaxoSmithKline PLC and Sun Hung
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Sun is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sun Hung Kai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Hung Kai 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 Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Hung Kai has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sun Hung go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Sun Hung
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.84 times more return on investment than Sun Hung. However, GlaxoSmithKline PLC ADR is 1.19 times less risky than Sun Hung. It trades about 0.02 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.02 per unit of risk. If you would invest 3,273 in GlaxoSmithKline PLC ADR on August 31, 2024 and sell it today you would earn a total of 140.00 from holding GlaxoSmithKline PLC ADR or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Sun Hung Kai
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Sun Hung Kai |
GlaxoSmithKline PLC and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Sun Hung
The main advantage of trading using opposite GlaxoSmithKline PLC and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sun Hung 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 Hung will offset losses from the drop in Sun Hung'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 Hung vs. HUMANA INC | Sun Hung vs. SCOR PK | Sun Hung vs. Aquagold International | Sun Hung vs. Thrivent High Yield |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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