Correlation Between Haleon Plc and Kaya Holdings
Can any of the company-specific risk be diversified away by investing in both Haleon Plc and Kaya Holdings 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 Kaya Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haleon plc and Kaya Holdings, you can compare the effects of market volatilities on Haleon Plc and Kaya Holdings 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 Kaya Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haleon Plc and Kaya Holdings.
Diversification Opportunities for Haleon Plc and Kaya Holdings
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Haleon and Kaya is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Kaya Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaya Holdings 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 Kaya Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaya Holdings has no effect on the direction of Haleon Plc i.e., Haleon Plc and Kaya Holdings go up and down completely randomly.
Pair Corralation between Haleon Plc and Kaya Holdings
Considering the 90-day investment horizon Haleon Plc is expected to generate 6.75 times less return on investment than Kaya Holdings. But when comparing it to its historical volatility, Haleon plc is 8.17 times less risky than Kaya Holdings. It trades about 0.05 of its potential returns per unit of risk. Kaya Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5.55 in Kaya Holdings on August 31, 2024 and sell it today you would lose (1.75) from holding Kaya Holdings or give up 31.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haleon plc vs. Kaya Holdings
Performance |
| Timeline |
| Haleon plc |
| Kaya Holdings |
Haleon Plc and Kaya Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haleon Plc and Kaya Holdings
The main advantage of trading using opposite Haleon Plc and Kaya Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haleon Plc position performs unexpectedly, Kaya Holdings 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 Kaya Holdings will offset losses from the drop in Kaya Holdings' long position.| Haleon Plc vs. Teva Pharma Industries | Haleon Plc vs. Bausch Health Companies | Haleon Plc vs. Zoetis Inc | Haleon Plc vs. Takeda Pharmaceutical Co |
| Kaya Holdings vs. Holloman Energy Corp | Kaya Holdings vs. cbdMD Inc | Kaya Holdings vs. Evolus Inc | Kaya Holdings vs. CV Sciences |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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