Correlation Between GlaxoSmithKline PLC and Unggul Indah
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Unggul Indah 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 Unggul Indah 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 Unggul Indah Cahaya, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Unggul Indah 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 Unggul Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Unggul Indah.
Diversification Opportunities for GlaxoSmithKline PLC and Unggul Indah
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Unggul is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Unggul Indah Cahaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unggul Indah Cahaya 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 Unggul Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unggul Indah Cahaya has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Unggul Indah go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Unggul Indah
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Unggul Indah. In addition to that, GlaxoSmithKline PLC is 2.96 times more volatile than Unggul Indah Cahaya. It trades about -0.31 of its total potential returns per unit of risk. Unggul Indah Cahaya is currently generating about -0.3 per unit of volatility. If you would invest 820,000 in Unggul Indah Cahaya on August 29, 2024 and sell it today you would lose (25,000) from holding Unggul Indah Cahaya or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Unggul Indah Cahaya
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Unggul Indah Cahaya |
GlaxoSmithKline PLC and Unggul Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Unggul Indah
The main advantage of trading using opposite GlaxoSmithKline PLC and Unggul Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Unggul Indah 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 Unggul Indah will offset losses from the drop in Unggul Indah'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 |
| Unggul Indah vs. Kedaung Indah Can | Unggul Indah vs. Langgeng Makmur Industri | Unggul Indah vs. Kabelindo Murni Tbk | Unggul Indah vs. Mustika Ratu Tbk |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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