Correlation Between Incannex Healthcare and Haleon Plc

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

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

Diversification Opportunities for Incannex Healthcare and Haleon Plc

-0.77

Correlation Coefficient

Incannex Healthcare  Haleon Plc

Pay attention - limited upside

The 3 months correlation between Incannex and Haleon is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Incannex Healthcare Ltd and Haleon plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon plc and Incannex Healthcare 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 Incannex Healthcare Ltd 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 Incannex Healthcare i.e., Incannex Healthcare and Haleon Plc go up and down completely randomly.

Pair Corralation between Incannex Healthcare and Haleon Plc

Given the investment horizon of 90 days Incannex Healthcare Ltd is expected to under-perform the Haleon Plc. In addition to that, Incannex Healthcare is 4.16 times more volatile than Haleon plc. It trades about -0.16 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  70.00  from holding Haleon plc or generate 7.22% return on investment over 90 days.

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

Incannex Healthcare Ltd  vs.  Haleon plc

Incannex Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Incannex Healthcare Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 Incannex Healthcare and Haleon Plc

The main advantage of trading using opposite Incannex Healthcare and Haleon Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incannex Healthcare 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 Incannex Healthcare Ltd 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.