Correlation Between Haleon PLC and Dermapharm Holding

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

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

Diversification Opportunities for Haleon PLC and Dermapharm Holding

-0.36

Correlation Coefficient

Haleon PLC  Dermapharm Holding

Very good diversification

The 3 months correlation between Haleon and Dermapharm is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Haleon PLC and Dermapharm Holding SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dermapharm Holding and Haleon 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 Haleon PLC are associated (or correlated) with Dermapharm Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dermapharm Holding has no effect on the direction of Haleon PLC i.e., Haleon PLC and Dermapharm Holding go up and down completely randomly.

Pair Corralation between Haleon PLC and Dermapharm Holding

Assuming the 90 days horizon Haleon PLC is expected to generate 1.03 times more return on investment than Dermapharm Holding. However, Haleon PLC is 1.03 times more volatile than Dermapharm Holding SE. It trades about 0.02 of its potential returns per unit of risk. Dermapharm Holding SE is currently generating about -0.01 per unit of risk. If you would invest  900.00  in Haleon PLC on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Haleon PLC or generate 1.11% return on investment over 90 days.

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

Haleon PLC  vs.  Dermapharm Holding SE

Haleon PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Haleon PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Haleon PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dermapharm Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dermapharm Holding SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dermapharm Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Haleon PLC and Dermapharm Holding

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

The idea behind Haleon PLC and Dermapharm Holding SE 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.