Correlation Between Haleon Plc and Cann American

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

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

Diversification Opportunities for Haleon Plc and Cann American

0.48

Correlation Coefficient

Haleon Plc  Cann American

Very weak diversification

The 3 months correlation between Haleon and Cann is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Cann American Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cann American Corp 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 Cann American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cann American Corp has no effect on the direction of Haleon Plc i.e., Haleon Plc and Cann American go up and down completely randomly.

Pair Corralation between Haleon Plc and Cann American

Assuming the 90 days horizon Haleon Plc is expected to generate 10.65 times less return on investment than Cann American. But when comparing it to its historical volatility, Haleon plc is 7.55 times less risky than Cann American. It trades about 0.05 of its potential returns per unit of risk. Cann American Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.39  in Cann American Corp on December 28, 2024 and sell it today you would lose (0.01) from holding Cann American Corp or give up 2.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Haleon plc  vs.  Cann American Corp

Haleon plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haleon plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Haleon Plc may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cann American Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cann American Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Cann American sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Haleon Plc and Cann American

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

The idea behind Haleon plc and Cann American Corp 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.