Correlation Between Horizon Pharma and GSK Plc
Can any of the company-specific risk be diversified away by investing in both Horizon Pharma and GSK Plc 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 Horizon Pharma and GSK Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Pharma PLC and GSK plc, you can compare the effects of market volatilities on Horizon Pharma and GSK Plc 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 Horizon Pharma with a short position of GSK Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Pharma and GSK Plc.
Diversification Opportunities for Horizon Pharma and GSK Plc
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Horizon and GSK is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Pharma PLC and GSK plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSK plc and Horizon Pharma 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 Horizon Pharma PLC are associated (or correlated) with GSK Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSK plc has no effect on the direction of Horizon Pharma i.e., Horizon Pharma and GSK Plc go up and down completely randomly.
Pair Corralation between Horizon Pharma and GSK Plc
If you would invest 10,040 in Horizon Pharma PLC on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Horizon Pharma PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Horizon Pharma PLC vs. GSK plc
Performance |
| Timeline |
| Horizon Pharma PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| GSK plc |
Horizon Pharma and GSK Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Pharma and GSK Plc
The main advantage of trading using opposite Horizon Pharma and GSK Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Pharma position performs unexpectedly, GSK Plc 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 GSK Plc will offset losses from the drop in GSK Plc's long position.| Horizon Pharma vs. Bristol Myers Squibb | Horizon Pharma vs. AbbVie Inc | Horizon Pharma vs. Merck Company | Horizon Pharma vs. Gilead Sciences |
| GSK Plc vs. Santen Pharmaceutical Co | GSK Plc vs. Ono Pharmaceutical Co | GSK Plc vs. Grifols SA ADR | GSK Plc vs. Pfizer 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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