Correlation Between GlaxoSmithKline PLC and Haw ParLtd

Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Haw ParLtd 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 Haw ParLtd 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 Haw Par, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Haw ParLtd 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 Haw ParLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Haw ParLtd.

Diversification Opportunities for GlaxoSmithKline PLC and Haw ParLtd

0.0

Correlation Coefficient

GlaxoSmithKline PLC  Haw ParLtd

Pay attention - limited upside

The 3 months correlation between GlaxoSmithKline and Haw is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Haw Par in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haw ParLtd 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 Haw ParLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haw ParLtd has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Haw ParLtd go up and down completely randomly.

Pair Corralation between GlaxoSmithKline PLC and Haw ParLtd

If you would invest  3,328  in GlaxoSmithKline PLC ADR on December 30, 2024 and sell it today you would earn a total of  546.00  from holding GlaxoSmithKline PLC ADR or generate 16.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GlaxoSmithKline PLC ADR  vs.  Haw Par

GlaxoSmithKline PLC ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GlaxoSmithKline PLC ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, GlaxoSmithKline PLC disclosed solid returns over the last few months and may actually be approaching a breakup point.

Haw ParLtd

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GlaxoSmithKline PLC and Haw ParLtd

The main advantage of trading using opposite GlaxoSmithKline PLC and Haw ParLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Haw ParLtd 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 Haw ParLtd will offset losses from the drop in Haw ParLtd's long position.

The idea behind GlaxoSmithKline PLC ADR and Haw Par 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.