Correlation Between Incyte and Haleon Plc

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

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

Diversification Opportunities for Incyte and Haleon Plc

-0.38

Correlation Coefficient

Incyte  Haleon Plc

Very good diversification

The 3 months correlation between Incyte and Haleon is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Incyte and Haleon plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon plc and Incyte 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 Incyte are associated (or correlated) with Haleon Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haleon plc has no effect on the direction of Incyte i.e., Incyte and Haleon Plc go up and down completely randomly.

Pair Corralation between Incyte and Haleon Plc

Given the investment horizon of 90 days Incyte is expected to under-perform the Haleon Plc. In addition to that, Incyte is 1.53 times more volatile than Haleon plc. It trades about -0.09 of its total potential returns per unit of risk. Haleon plc is currently generating about 0.09 per unit of volatility. If you would invest  969.00  in Haleon plc on December 20, 2024 and sell it today you would earn a total of  68.00  from holding Haleon plc or generate 7.02% return on investment over 90 days.

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

Incyte  vs.  Haleon plc

Incyte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Incyte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with Incyte and Haleon Plc

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

The idea behind Incyte and Haleon plc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.