Correlation Between Haleon Plc and MIRA Pharmaceuticals

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

Diversification Opportunities for Haleon Plc and MIRA Pharmaceuticals

0.05

Correlation Coefficient

Haleon Plc  MIRA Pharmaceuticals

Significant diversification

The 3 months correlation between Haleon and MIRA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and MIRA Pharmaceuticals Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRA 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 MIRA Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRA Pharmaceuticals has no effect on the direction of Haleon Plc i.e., Haleon Plc and MIRA Pharmaceuticals go up and down completely randomly.

Pair Corralation between Haleon Plc and MIRA Pharmaceuticals

Considering the 90-day investment horizon Haleon plc is expected to generate 0.16 times more return on investment than MIRA Pharmaceuticals. However, Haleon plc is 6.27 times less risky than MIRA Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. MIRA Pharmaceuticals Common is currently generating about -0.05 per unit of risk. If you would invest  744.00  in Haleon plc on March 19, 2024 and sell it today you would earn a total of  95.00  from holding Haleon plc or generate 12.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	40.72%
Values	Daily Returns

Haleon plc  vs.  MIRA Pharmaceuticals Common

Haleon plc

Risk-Adjusted Performance

0 of 100

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 recent stock price disarray, may contribute to short-term losses for the investors.

MIRA Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MIRA Pharmaceuticals Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Haleon Plc and MIRA Pharmaceuticals

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

The idea behind Haleon plc and MIRA Pharmaceuticals Common 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.