Correlation Between Haleon Plc and Pharmacielo

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

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

Diversification Opportunities for Haleon Plc and Pharmacielo

-0.66

Correlation Coefficient

Haleon Plc  Pharmacielo

Excellent diversification

The 3 months correlation between Haleon and Pharmacielo is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Pharmacielo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharmacielo 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 Pharmacielo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharmacielo has no effect on the direction of Haleon Plc i.e., Haleon Plc and Pharmacielo go up and down completely randomly.

Pair Corralation between Haleon Plc and Pharmacielo

Considering the 90-day investment horizon Haleon plc is expected to generate 0.15 times more return on investment than Pharmacielo. However, Haleon plc is 6.82 times less risky than Pharmacielo. It trades about 0.09 of its potential returns per unit of risk. Pharmacielo is currently generating about 0.0 per unit of risk. If you would invest  951.00  in Haleon plc on December 30, 2024 and sell it today you would earn a total of  73.00  from holding Haleon plc or generate 7.68% 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.  Pharmacielo

Haleon plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Haleon plc are ranked lower than 7 (%) 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.

Pharmacielo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pharmacielo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pharmacielo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Haleon Plc and Pharmacielo

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

The idea behind Haleon plc and Pharmacielo 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.