Correlation Between Halozyme Therapeutics and United Therapeutics

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

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

Diversification Opportunities for Halozyme Therapeutics and United Therapeutics

-0.28

Correlation Coefficient

Halozyme Therapeutics  United Therapeutics

Very good diversification

The 3 months correlation between Halozyme and United is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Halozyme Therapeutics and United Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Therapeutics and Halozyme Therapeutics 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 Halozyme Therapeutics are associated (or correlated) with United Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Therapeutics has no effect on the direction of Halozyme Therapeutics i.e., Halozyme Therapeutics and United Therapeutics go up and down completely randomly.

Pair Corralation between Halozyme Therapeutics and United Therapeutics

Given the investment horizon of 90 days Halozyme Therapeutics is expected to generate 0.61 times more return on investment than United Therapeutics. However, Halozyme Therapeutics is 1.64 times less risky than United Therapeutics. It trades about 0.38 of its potential returns per unit of risk. United Therapeutics is currently generating about -0.1 per unit of risk. If you would invest  4,716  in Halozyme Therapeutics on December 21, 2024 and sell it today you would earn a total of  1,716  from holding Halozyme Therapeutics or generate 36.39% return on investment over 90 days.

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

Halozyme Therapeutics  vs.  United Therapeutics

Halozyme Therapeutics

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Halozyme Therapeutics are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Halozyme Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

United Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Halozyme Therapeutics and United Therapeutics

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

The idea behind Halozyme Therapeutics and United Therapeutics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..