Correlation Between Haleon Plc and Teva Pharma

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

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

Diversification Opportunities for Haleon Plc and Teva Pharma

-0.76

Correlation Coefficient

Haleon Plc  Teva Pharma

Pay attention - limited upside

The 3 months correlation between Haleon and Teva is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Teva Pharma Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharma Industries 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 Teva Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharma Industries has no effect on the direction of Haleon Plc i.e., Haleon Plc and Teva Pharma go up and down completely randomly.

Pair Corralation between Haleon Plc and Teva Pharma

Considering the 90-day investment horizon Haleon plc is expected to generate 0.5 times more return on investment than Teva Pharma. However, Haleon plc is 1.99 times less risky than Teva Pharma. It trades about 0.08 of its potential returns per unit of risk. Teva Pharma Industries is currently generating about -0.2 per unit of risk. If you would invest  951.00  in Haleon plc on December 29, 2024 and sell it today you would earn a total of  61.00  from holding Haleon plc or generate 6.41% 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.  Teva Pharma Industries

Haleon plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haleon plc are ranked lower than 6 (%) 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.

Teva Pharma Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teva Pharma Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Haleon Plc and Teva Pharma

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

The idea behind Haleon plc and Teva Pharma Industries 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .