Correlation Between Collegium Pharmaceutical and Haleon Plc
Can any of the company-specific risk be diversified away by investing in both Collegium Pharmaceutical 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 Collegium Pharmaceutical and Haleon Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collegium Pharmaceutical and Haleon plc, you can compare the effects of market volatilities on Collegium Pharmaceutical 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 Collegium Pharmaceutical with a short position of Haleon Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and Haleon Plc.
Diversification Opportunities for Collegium Pharmaceutical and Haleon Plc
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Collegium and Haleon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Haleon plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon plc and Collegium Pharmaceutical 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 Collegium Pharmaceutical 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 Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Haleon Plc go up and down completely randomly.
Pair Corralation between Collegium Pharmaceutical and Haleon Plc
Given the investment horizon of 90 days Collegium Pharmaceutical is expected to under-perform the Haleon Plc. In addition to that, Collegium Pharmaceutical is 2.48 times more volatile than Haleon plc. It trades about -0.24 of its total potential returns per unit of risk. Haleon plc is currently generating about -0.16 per unit of volatility. If you would invest 998.00 in Haleon plc on August 27, 2024 and sell it today you would lose (33.00) from holding Haleon plc or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collegium Pharmaceutical vs. Haleon plc
Performance |
| Timeline |
| Collegium Pharmaceutical |
| Haleon plc |
Collegium Pharmaceutical and Haleon Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collegium Pharmaceutical and Haleon Plc
The main advantage of trading using opposite Collegium Pharmaceutical and Haleon Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collegium Pharmaceutical 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.| Collegium Pharmaceutical vs. Phibro Animal Health | Collegium Pharmaceutical vs. ANI Pharmaceuticals | Collegium Pharmaceutical vs. Procaps Group SA | Collegium Pharmaceutical vs. Amphastar P |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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