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

-0.32

Correlation Coefficient

Haleon Plc  Pharmacielo

Very good diversification

The 3 months correlation between Haleon and Pharmacielo is -0.32. 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 5.2 times less return on investment than Pharmacielo. But when comparing it to its historical volatility, Haleon plc is 8.46 times less risky than Pharmacielo. It trades about 0.06 of its potential returns per unit of risk. Pharmacielo is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Pharmacielo on December 2, 2024 and sell it today you would lose (8.39) from holding Pharmacielo or give up 59.93% of portfolio value over 90 days.

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

Haleon plc  vs.  Pharmacielo

Haleon plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haleon plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Haleon Plc is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pharmacielo

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pharmacielo are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Pharmacielo may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.