Correlation Between Gelteq Limited and Haleon Plc

Can any of the company-specific risk be diversified away by investing in both Gelteq Limited and Haleon Plc 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 Gelteq Limited and Haleon Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gelteq Limited Ordinary and Haleon plc, you can compare the effects of market volatilities on Gelteq Limited and Haleon Plc 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 Gelteq Limited with a short position of Haleon Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gelteq Limited and Haleon Plc.

Diversification Opportunities for Gelteq Limited and Haleon Plc

0.05

Correlation Coefficient

Gelteq Limited  Haleon Plc

Significant diversification

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

Pair Corralation between Gelteq Limited and Haleon Plc

Given the investment horizon of 90 days Gelteq Limited Ordinary is expected to under-perform the Haleon Plc. In addition to that, Gelteq Limited is 9.19 times more volatile than Haleon plc. It trades about -0.13 of its total potential returns per unit of risk. Haleon plc is currently generating about -0.08 per unit of volatility. If you would invest  1,016  in Haleon plc on September 3, 2024 and sell it today you would lose (50.00) from holding Haleon plc or give up 4.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	37.5%
Values	Daily Returns

Gelteq Limited Ordinary  vs.  Haleon plc

Gelteq Limited Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gelteq Limited Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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

Pair Trading with Gelteq Limited and Haleon Plc

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

The idea behind Gelteq Limited Ordinary and Haleon plc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.