Correlation Between LIVZON PHARMAC and Haleon PLC

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

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

Diversification Opportunities for LIVZON PHARMAC and Haleon PLC

0.4

Correlation Coefficient

LIVZON PHARMAC  Haleon PLC

Very weak diversification

The 3 months correlation between LIVZON and Haleon is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding LIVZON PHARMAC GRP and Haleon PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon PLC and LIVZON PHARMAC 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 LIVZON PHARMAC GRP 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 LIVZON PHARMAC i.e., LIVZON PHARMAC and Haleon PLC go up and down completely randomly.

Pair Corralation between LIVZON PHARMAC and Haleon PLC

Assuming the 90 days horizon LIVZON PHARMAC GRP is expected to under-perform the Haleon PLC. In addition to that, LIVZON PHARMAC is 1.12 times more volatile than Haleon PLC. It trades about -0.02 of its total potential returns per unit of risk. Haleon PLC is currently generating about -0.01 per unit of volatility. If you would invest  910.00  in Haleon PLC on October 14, 2024 and sell it today you would lose (15.00) from holding Haleon PLC or give up 1.65% of portfolio value over 90 days.

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

LIVZON PHARMAC GRP  vs.  Haleon PLC

LIVZON PHARMAC GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIVZON PHARMAC GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LIVZON PHARMAC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Haleon PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haleon PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Haleon PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LIVZON PHARMAC and Haleon PLC

The main advantage of trading using opposite LIVZON PHARMAC and Haleon PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIVZON PHARMAC 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 LIVZON PHARMAC GRP 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.