Correlation Between GlaxoSmithKline PLC and MiraeAsset TIGER

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

Diversification Opportunities for GlaxoSmithKline PLC and MiraeAsset TIGER

-0.83

Correlation Coefficient

GlaxoSmithKline PLC  MiraeAsset TIGER

Pay attention - limited upside

The 3 months correlation between GlaxoSmithKline and MiraeAsset is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and MiraeAsset TIGER Inverse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MiraeAsset TIGER Inverse 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 MiraeAsset TIGER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MiraeAsset TIGER Inverse has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and MiraeAsset TIGER go up and down completely randomly.

Pair Corralation between GlaxoSmithKline PLC and MiraeAsset TIGER

Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 1.05 times more return on investment than MiraeAsset TIGER. However, GlaxoSmithKline PLC is 1.05 times more volatile than MiraeAsset TIGER Inverse. It trades about 0.02 of its potential returns per unit of risk. MiraeAsset TIGER Inverse is currently generating about 0.01 per unit of risk. If you would invest  3,274  in GlaxoSmithKline PLC ADR on August 28, 2024 and sell it today you would earn a total of  141.00  from holding GlaxoSmithKline PLC ADR or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.33%
Values	Daily Returns

GlaxoSmithKline PLC ADR  vs.  MiraeAsset TIGER Inverse

GlaxoSmithKline PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlaxoSmithKline PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

MiraeAsset TIGER Inverse

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MiraeAsset TIGER Inverse are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MiraeAsset TIGER may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with GlaxoSmithKline PLC and MiraeAsset TIGER

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

The idea behind GlaxoSmithKline PLC ADR and MiraeAsset TIGER Inverse 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 Stocks Directory module to find actively traded stocks across global markets.