Correlation Between Haleon Plc and Milestone Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Haleon Plc and Milestone Pharmaceuticals 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 Milestone Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haleon plc and Milestone Pharmaceuticals, you can compare the effects of market volatilities on Haleon Plc and Milestone Pharmaceuticals 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 Milestone Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haleon Plc and Milestone Pharmaceuticals.

Diversification Opportunities for Haleon Plc and Milestone Pharmaceuticals

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Haleon and Milestone is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Milestone Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Milestone Pharmaceuticals 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 Milestone Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Milestone Pharmaceuticals has no effect on the direction of Haleon Plc i.e., Haleon Plc and Milestone Pharmaceuticals go up and down completely randomly.

Pair Corralation between Haleon Plc and Milestone Pharmaceuticals

Considering the 90-day investment horizon Haleon plc is expected to under-perform the Milestone Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Haleon plc is 4.52 times less risky than Milestone Pharmaceuticals. The stock trades about -0.33 of its potential returns per unit of risk. The Milestone Pharmaceuticals is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  148.00  in Milestone Pharmaceuticals on August 13, 2024 and sell it today you would earn a total of  50.00  from holding Milestone Pharmaceuticals or generate 33.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Haleon plc  vs.  Milestone Pharmaceuticals

 Performance 
       Timeline  
Haleon plc 

Risk-Adjusted Performance

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Weak
 
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Very Weak
Over the last 90 days Haleon plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Haleon Plc is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Milestone Pharmaceuticals 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Milestone Pharmaceuticals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Milestone Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Haleon Plc and Milestone Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Haleon Plc and Milestone Pharmaceuticals

The main advantage of trading using opposite Haleon Plc and Milestone Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haleon Plc position performs unexpectedly, Milestone Pharmaceuticals 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 Milestone Pharmaceuticals will offset losses from the drop in Milestone Pharmaceuticals' long position.
The idea behind Haleon plc and Milestone Pharmaceuticals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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