Correlation Between Haleon Plc and Kamada

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

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

Diversification Opportunities for Haleon Plc and Kamada

-0.78

Correlation Coefficient

Haleon Plc  Kamada

Pay attention - limited upside

The 3 months correlation between Haleon and Kamada is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Kamada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamada 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 Kamada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kamada has no effect on the direction of Haleon Plc i.e., Haleon Plc and Kamada go up and down completely randomly.

Pair Corralation between Haleon Plc and Kamada

Considering the 90-day investment horizon Haleon plc is expected to generate 0.49 times more return on investment than Kamada. However, Haleon plc is 2.04 times less risky than Kamada. It trades about 0.05 of its potential returns per unit of risk. Kamada is currently generating about 0.02 per unit of risk. If you would invest  797.00  in Haleon plc on September 1, 2024 and sell it today you would earn a total of  169.00  from holding Haleon plc or generate 21.2% return on investment over 90 days.

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

Haleon plc  vs.  Kamada

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 very healthy essential indicators, Haleon Plc is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Kamada

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kamada are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Kamada may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Haleon Plc and Kamada

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

The idea behind Haleon plc and Kamada 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.