Correlation Between Haleon Plc and Hepion Pharmaceuticals

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

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

Diversification Opportunities for Haleon Plc and Hepion Pharmaceuticals

0.23

Correlation Coefficient

Haleon Plc  Hepion Pharmaceuticals

Modest diversification

The 3 months correlation between Haleon and Hepion is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Hepion Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hepion Pharmaceuticals 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 Hepion Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hepion Pharmaceuticals has no effect on the direction of Haleon Plc i.e., Haleon Plc and Hepion Pharmaceuticals go up and down completely randomly.

Pair Corralation between Haleon Plc and Hepion Pharmaceuticals

Considering the 90-day investment horizon Haleon plc is expected to generate 0.17 times more return on investment than Hepion Pharmaceuticals. However, Haleon plc is 5.72 times less risky than Hepion Pharmaceuticals. It trades about -0.14 of its potential returns per unit of risk. Hepion Pharmaceuticals is currently generating about -0.03 per unit of risk. If you would invest  1,065  in Haleon plc on September 17, 2024 and sell it today you would lose (89.00) from holding Haleon plc or give up 8.36% of portfolio value over 90 days.

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

Haleon plc  vs.  Hepion Pharmaceuticals

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.

Hepion Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hepion Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Haleon Plc and Hepion Pharmaceuticals

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

The idea behind Haleon plc and Hepion Pharmaceuticals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.