Correlation Between Haleon Plc and Agios Pharm

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

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

Diversification Opportunities for Haleon Plc and Agios Pharm

-0.3

Correlation Coefficient

Haleon Plc  Agios Pharm

Very good diversification

The 3 months correlation between Haleon and Agios is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Agios Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agios Pharm 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 Agios Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agios Pharm has no effect on the direction of Haleon Plc i.e., Haleon Plc and Agios Pharm go up and down completely randomly.

Pair Corralation between Haleon Plc and Agios Pharm

Considering the 90-day investment horizon Haleon plc is expected to generate 0.56 times more return on investment than Agios Pharm. However, Haleon plc is 1.78 times less risky than Agios Pharm. It trades about 0.06 of its potential returns per unit of risk. Agios Pharm is currently generating about -0.04 per unit of risk. If you would invest  964.00  in Haleon plc on December 27, 2024 and sell it today you would earn a total of  48.00  from holding Haleon plc or generate 4.98% 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.  Agios Pharm

Haleon plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haleon plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Haleon Plc is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Agios Pharm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agios Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Agios Pharm is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Haleon Plc and Agios Pharm

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

The idea behind Haleon plc and Agios Pharm 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.