Correlation Between Haleon Plc and Red Light
Can any of the company-specific risk be diversified away by investing in both Haleon Plc and Red Light 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 Red Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haleon plc and Red Light Holland, you can compare the effects of market volatilities on Haleon Plc and Red Light 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 Red Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haleon Plc and Red Light.
Diversification Opportunities for Haleon Plc and Red Light
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Haleon and Red is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Red Light Holland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Light Holland 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 Red Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Light Holland has no effect on the direction of Haleon Plc i.e., Haleon Plc and Red Light go up and down completely randomly.
Pair Corralation between Haleon Plc and Red Light
Considering the 90-day investment horizon Haleon plc is expected to under-perform the Red Light. But the stock apears to be less risky and, when comparing its historical volatility, Haleon plc is 8.63 times less risky than Red Light. The stock trades about -0.01 of its potential returns per unit of risk. The Red Light Holland is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2.40 in Red Light Holland on September 1, 2024 and sell it today you would earn a total of 0.99 from holding Red Light Holland or generate 41.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Haleon plc vs. Red Light Holland
Performance |
| Timeline |
| Haleon plc |
| Red Light Holland |
Haleon Plc and Red Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haleon Plc and Red Light
The main advantage of trading using opposite Haleon Plc and Red Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haleon Plc position performs unexpectedly, Red Light 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 Red Light will offset losses from the drop in Red Light's long position.| Haleon Plc vs. Tff Pharmaceuticals | Haleon Plc vs. Eliem Therapeutics | Haleon Plc vs. Inhibrx | Haleon Plc vs. Enliven Therapeutics |
| Red Light vs. Holloman Energy Corp | Red Light vs. cbdMD Inc | Red Light vs. Evolus Inc | Red Light 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 Stocks Directory module to find actively traded stocks across global markets.
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