Correlation Between Haleon Plc and Procaps Group

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

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

Diversification Opportunities for Haleon Plc and Procaps Group

-0.02

Correlation Coefficient

Haleon Plc  Procaps Group

Good diversification

The 3 months correlation between Haleon and Procaps is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Procaps Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procaps Group SA 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 Procaps Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procaps Group SA has no effect on the direction of Haleon Plc i.e., Haleon Plc and Procaps Group go up and down completely randomly.

Pair Corralation between Haleon Plc and Procaps Group

Considering the 90-day investment horizon Haleon Plc is expected to generate 4.63 times less return on investment than Procaps Group. But when comparing it to its historical volatility, Haleon plc is 10.18 times less risky than Procaps Group. It trades about 0.02 of its potential returns per unit of risk. Procaps Group SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  151.00  in Procaps Group SA on November 29, 2024 and sell it today you would lose (45.00) from holding Procaps Group SA or give up 29.8% 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.  Procaps Group SA

Haleon plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haleon plc are ranked lower than 1 (%) 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.

Procaps Group SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Procaps Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Procaps Group may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Haleon Plc and Procaps Group

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

The idea behind Haleon plc and Procaps Group SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.