Correlation Between GlaxoSmithKline PLC and Shuttle Pharmaceuticals

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

Diversification Opportunities for GlaxoSmithKline PLC and Shuttle Pharmaceuticals

0.33

Correlation Coefficient

GlaxoSmithKline PLC  Shuttle Pharmaceuticals

Weak diversification

The 3 months correlation between GlaxoSmithKline and Shuttle is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Shuttle Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shuttle Pharmaceuticals 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 Shuttle Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shuttle Pharmaceuticals has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Shuttle Pharmaceuticals go up and down completely randomly.

Pair Corralation between GlaxoSmithKline PLC and Shuttle Pharmaceuticals

Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.4 times more return on investment than Shuttle Pharmaceuticals. However, GlaxoSmithKline PLC ADR is 2.48 times less risky than Shuttle Pharmaceuticals. It trades about 0.23 of its potential returns per unit of risk. Shuttle Pharmaceuticals is currently generating about 0.01 per unit of risk. If you would invest  4,119  in GlaxoSmithKline PLC ADR on February 5, 2024 and sell it today you would earn a total of  231.00  from holding GlaxoSmithKline PLC ADR or generate 5.61% return on investment over 90 days.

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

GlaxoSmithKline PLC ADR  vs.  Shuttle Pharmaceuticals

GlaxoSmithKline PLC ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GlaxoSmithKline PLC ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, GlaxoSmithKline PLC is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Shuttle Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shuttle Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Shuttle Pharmaceuticals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GlaxoSmithKline PLC and Shuttle Pharmaceuticals

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

The idea behind GlaxoSmithKline PLC ADR and Shuttle Pharmaceuticals 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.