Correlation Between GlaxoSmithKline Plc and Grupo Carso

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Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline Plc and Grupo Carso 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 Grupo Carso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlaxoSmithKline plc and Grupo Carso SAB, you can compare the effects of market volatilities on GlaxoSmithKline Plc and Grupo Carso 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 Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline Plc and Grupo Carso.

Diversification Opportunities for GlaxoSmithKline Plc and Grupo Carso

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between GlaxoSmithKline and Grupo is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline plc and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB 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 are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of GlaxoSmithKline Plc i.e., GlaxoSmithKline Plc and Grupo Carso go up and down completely randomly.

Pair Corralation between GlaxoSmithKline Plc and Grupo Carso

Assuming the 90 days trading horizon GlaxoSmithKline plc is expected to generate 1.7 times more return on investment than Grupo Carso. However, GlaxoSmithKline Plc is 1.7 times more volatile than Grupo Carso SAB. It trades about 0.02 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about -0.03 per unit of risk. If you would invest  73,706  in GlaxoSmithKline plc on September 14, 2024 and sell it today you would earn a total of  234.00  from holding GlaxoSmithKline plc or generate 0.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

GlaxoSmithKline plc  vs.  Grupo Carso SAB

 Performance 
       Timeline  
GlaxoSmithKline plc 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days GlaxoSmithKline plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GlaxoSmithKline Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Grupo Carso SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grupo Carso is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

GlaxoSmithKline Plc and Grupo Carso Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GlaxoSmithKline Plc and Grupo Carso

The main advantage of trading using opposite GlaxoSmithKline Plc and Grupo Carso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline Plc position performs unexpectedly, Grupo Carso 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 Grupo Carso will offset losses from the drop in Grupo Carso's long position.
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The idea behind GlaxoSmithKline plc and Grupo Carso SAB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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