Correlation Between Estrella Immunopharma and Haleon Plc

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

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

Diversification Opportunities for Estrella Immunopharma and Haleon Plc

0.48

Correlation Coefficient

Estrella Immunopharma  Haleon Plc

Very weak diversification

The 3 months correlation between Estrella and Haleon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Estrella Immunopharma and Haleon plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon plc and Estrella Immunopharma 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 Estrella Immunopharma are associated (or correlated) with Haleon Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haleon plc has no effect on the direction of Estrella Immunopharma i.e., Estrella Immunopharma and Haleon Plc go up and down completely randomly.

Pair Corralation between Estrella Immunopharma and Haleon Plc

Assuming the 90 days horizon Estrella Immunopharma is expected to generate 11.36 times more return on investment than Haleon Plc. However, Estrella Immunopharma is 11.36 times more volatile than Haleon plc. It trades about 0.05 of its potential returns per unit of risk. Haleon plc is currently generating about 0.09 per unit of risk. If you would invest  8.79  in Estrella Immunopharma on December 29, 2024 and sell it today you would lose (1.08) from holding Estrella Immunopharma or give up 12.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	57.38%
Values	Daily Returns

Estrella Immunopharma  vs.  Haleon plc

Estrella Immunopharma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Estrella Immunopharma are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Estrella Immunopharma showed solid returns over the last few months and may actually be approaching a breakup point.

Haleon plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haleon plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Haleon Plc may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Estrella Immunopharma and Haleon Plc

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

The idea behind Estrella Immunopharma and Haleon 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.