Correlation Between State Bank and GlaxoSmithKline PLC
Can any of the company-specific risk be diversified away by investing in both State Bank and GlaxoSmithKline 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 State Bank and GlaxoSmithKline PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and GlaxoSmithKline PLC, you can compare the effects of market volatilities on State Bank and GlaxoSmithKline 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 State Bank with a short position of GlaxoSmithKline PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and GlaxoSmithKline PLC.
Diversification Opportunities for State Bank and GlaxoSmithKline PLC
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and GlaxoSmithKline is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and GlaxoSmithKline PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlaxoSmithKline PLC and State Bank 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 State Bank of are associated (or correlated) with GlaxoSmithKline PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlaxoSmithKline PLC has no effect on the direction of State Bank i.e., State Bank and GlaxoSmithKline PLC go up and down completely randomly.
Pair Corralation between State Bank and GlaxoSmithKline PLC
Assuming the 90 days trading horizon State Bank of is expected to generate 1.34 times more return on investment than GlaxoSmithKline PLC. However, State Bank is 1.34 times more volatile than GlaxoSmithKline PLC. It trades about 0.07 of its potential returns per unit of risk. GlaxoSmithKline PLC is currently generating about 0.0 per unit of risk. If you would invest 6,738 in State Bank of on August 31, 2024 and sell it today you would earn a total of 3,242 from holding State Bank of or generate 48.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. GlaxoSmithKline PLC
Performance |
| Timeline |
| State Bank |
| GlaxoSmithKline PLC |
State Bank and GlaxoSmithKline PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and GlaxoSmithKline PLC
The main advantage of trading using opposite State Bank and GlaxoSmithKline PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, GlaxoSmithKline 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 GlaxoSmithKline PLC will offset losses from the drop in GlaxoSmithKline PLC's long position.| State Bank vs. Advanced Medical Solutions | State Bank vs. Westlake Chemical Corp | State Bank vs. McEwen Mining | State Bank vs. Elmos Semiconductor SE |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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