Correlation Between GlaxoSmithKline PLC and TGS-NOPEC GEOPHYSIC
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and TGS-NOPEC GEOPHYSIC 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 TGS-NOPEC GEOPHYSIC 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 TGS NOPEC GEOPHYSIC, you can compare the effects of market volatilities on GlaxoSmithKline PLC and TGS-NOPEC GEOPHYSIC 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 TGS-NOPEC GEOPHYSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and TGS-NOPEC GEOPHYSIC.
Diversification Opportunities for GlaxoSmithKline PLC and TGS-NOPEC GEOPHYSIC
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and TGS-NOPEC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and TGS NOPEC GEOPHYSIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGS NOPEC GEOPHYSIC 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 TGS-NOPEC GEOPHYSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGS NOPEC GEOPHYSIC has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and TGS-NOPEC GEOPHYSIC go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and TGS-NOPEC GEOPHYSIC
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the TGS-NOPEC GEOPHYSIC. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 2.95 times less risky than TGS-NOPEC GEOPHYSIC. The stock trades about -0.23 of its potential returns per unit of risk. The TGS NOPEC GEOPHYSIC is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 716.00 in TGS NOPEC GEOPHYSIC on August 31, 2024 and sell it today you would earn a total of 216.00 from holding TGS NOPEC GEOPHYSIC or generate 30.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. TGS NOPEC GEOPHYSIC
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| TGS NOPEC GEOPHYSIC |
GlaxoSmithKline PLC and TGS-NOPEC GEOPHYSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and TGS-NOPEC GEOPHYSIC
The main advantage of trading using opposite GlaxoSmithKline PLC and TGS-NOPEC GEOPHYSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, TGS-NOPEC GEOPHYSIC 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 TGS-NOPEC GEOPHYSIC will offset losses from the drop in TGS-NOPEC GEOPHYSIC'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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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