Correlation Between Haleon Plc and Durect

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

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

Diversification Opportunities for Haleon Plc and Durect

0.45

Correlation Coefficient

Haleon Plc  Durect

Very weak diversification

The 3 months correlation between Haleon and Durect is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Durect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Durect 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 Durect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Durect has no effect on the direction of Haleon Plc i.e., Haleon Plc and Durect go up and down completely randomly.

Pair Corralation between Haleon Plc and Durect

Considering the 90-day investment horizon Haleon Plc is expected to generate 5.07 times less return on investment than Durect. But when comparing it to its historical volatility, Haleon plc is 9.56 times less risky than Durect. It trades about 0.12 of its potential returns per unit of risk. Durect is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  90.00  in Durect on September 21, 2024 and sell it today you would earn a total of  5.00  from holding Durect or generate 5.56% return on investment over 90 days.

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

Haleon plc  vs.  Durect

Haleon plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haleon plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Durect

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Haleon Plc and Durect

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

The idea behind Haleon plc and Durect 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 CEOs Directory module to screen CEOs from public companies around the world.