Correlation Between Palantir Technologies and GSK Plc

Can any of the company-specific risk be diversified away by investing in both Palantir Technologies 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 Palantir Technologies and GSK Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Palantir Technologies Class and GSK plc, you can compare the effects of market volatilities on Palantir Technologies 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 Palantir Technologies with a short position of GSK Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and GSK Plc.

Diversification Opportunities for Palantir Technologies and GSK Plc

0.29

Correlation Coefficient

Palantir Technologies  GSK Plc

Modest diversification

The 3 months correlation between Palantir and GSK is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class and GSK plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSK plc and Palantir Technologies 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 Palantir Technologies Class 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 Palantir Technologies i.e., Palantir Technologies and GSK Plc go up and down completely randomly.

Pair Corralation between Palantir Technologies and GSK Plc

Given the investment horizon of 90 days Palantir Technologies Class is expected to generate 1.98 times more return on investment than GSK Plc. However, Palantir Technologies is 1.98 times more volatile than GSK plc. It trades about 0.08 of its potential returns per unit of risk. GSK plc is currently generating about 0.1 per unit of risk. If you would invest  8,214  in Palantir Technologies Class on December 26, 2024 and sell it today you would earn a total of  1,461  from holding Palantir Technologies Class or generate 17.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Palantir Technologies Class  vs.  GSK plc

Palantir Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

GSK plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GSK plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GSK Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Palantir Technologies and GSK Plc

The main advantage of trading using opposite Palantir Technologies and GSK Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies 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.

The idea behind Palantir Technologies Class and GSK plc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.