Correlation Between Haleon Plc and Alnylam Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Haleon Plc and Alnylam 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 Alnylam 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 Alnylam Pharmaceuticals, you can compare the effects of market volatilities on Haleon Plc and Alnylam 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 Alnylam Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haleon Plc and Alnylam Pharmaceuticals.

Diversification Opportunities for Haleon Plc and Alnylam Pharmaceuticals

0.0

Correlation Coefficient

Haleon Plc  Alnylam Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Haleon and Alnylam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and Alnylam Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alnylam 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 Alnylam Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alnylam Pharmaceuticals has no effect on the direction of Haleon Plc i.e., Haleon Plc and Alnylam Pharmaceuticals go up and down completely randomly.

Pair Corralation between Haleon Plc and Alnylam Pharmaceuticals

Considering the 90-day investment horizon Haleon Plc is expected to generate 4.13 times less return on investment than Alnylam Pharmaceuticals. But when comparing it to its historical volatility, Haleon plc is 1.45 times less risky than Alnylam Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Alnylam Pharmaceuticals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  14,853  in Alnylam Pharmaceuticals on March 14, 2024 and sell it today you would earn a total of  790.00  from holding Alnylam Pharmaceuticals or generate 5.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Haleon plc  vs.  Alnylam Pharmaceuticals

Haleon plc

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Haleon plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Alnylam Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alnylam Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Alnylam Pharmaceuticals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Haleon Plc and Alnylam Pharmaceuticals

The main advantage of trading using opposite Haleon Plc and Alnylam Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haleon Plc position performs unexpectedly, Alnylam 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 Alnylam Pharmaceuticals will offset losses from the drop in Alnylam Pharmaceuticals' long position.

The idea behind Haleon plc and Alnylam 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.