Correlation Between Haleon Plc and Context Therapeutics

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

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

Diversification Opportunities for Haleon Plc and Context Therapeutics

-0.15

Correlation Coefficient

Haleon Plc  Context Therapeutics

Good diversification

The 3 months correlation between Haleon and Context is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Context Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Context Therapeutics 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 Context Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Context Therapeutics has no effect on the direction of Haleon Plc i.e., Haleon Plc and Context Therapeutics go up and down completely randomly.

Pair Corralation between Haleon Plc and Context Therapeutics

Considering the 90-day investment horizon Haleon plc is expected to generate 0.4 times more return on investment than Context Therapeutics. However, Haleon plc is 2.52 times less risky than Context Therapeutics. It trades about 0.28 of its potential returns per unit of risk. Context Therapeutics is currently generating about -0.01 per unit of risk. If you would invest  948.00  in Haleon plc on December 5, 2024 and sell it today you would earn a total of  108.00  from holding Haleon plc or generate 11.39% 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.  Context Therapeutics

Haleon plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Haleon plc are ranked lower than 9 (%) 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.

Context Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Context Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Haleon Plc and Context Therapeutics

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

The idea behind Haleon plc and Context 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.