Correlation Between GlaxoSmithKline PLC and Zhibao Technology
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Zhibao Technology 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 Zhibao Technology 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 Zhibao Technology Class, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Zhibao Technology 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 Zhibao Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Zhibao Technology.
Diversification Opportunities for GlaxoSmithKline PLC and Zhibao Technology
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Zhibao is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Zhibao Technology Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhibao Technology Class 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 Zhibao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhibao Technology Class has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Zhibao Technology go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Zhibao Technology
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Zhibao Technology. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 3.39 times less risky than Zhibao Technology. The stock trades about -0.33 of its potential returns per unit of risk. The Zhibao Technology Class is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 313.00 in Zhibao Technology Class on August 27, 2024 and sell it today you would lose (13.00) from holding Zhibao Technology Class or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Zhibao Technology Class
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Zhibao Technology Class |
GlaxoSmithKline PLC and Zhibao Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Zhibao Technology
The main advantage of trading using opposite GlaxoSmithKline PLC and Zhibao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Zhibao Technology 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 Zhibao Technology will offset losses from the drop in Zhibao Technology'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 |
| Zhibao Technology vs. Repligen | Zhibao Technology vs. Universal Technical Institute | Zhibao Technology vs. Nuvalent | Zhibao Technology vs. Udemy Inc |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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