Correlation Between Hafnia and KRAKATAU STEEL

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

By analyzing existing cross correlation between Hafnia Limited and KRAKATAU STEEL B , you can compare the effects of market volatilities on Hafnia and KRAKATAU STEEL 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 Hafnia with a short position of KRAKATAU STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hafnia and KRAKATAU STEEL.

Diversification Opportunities for Hafnia and KRAKATAU STEEL

-0.39

Correlation Coefficient

Hafnia  KRAKATAU STEEL

Very good diversification

The 3 months correlation between Hafnia and KRAKATAU is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and KRAKATAU STEEL B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRAKATAU STEEL B and Hafnia 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 Hafnia Limited are associated (or correlated) with KRAKATAU STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRAKATAU STEEL B has no effect on the direction of Hafnia i.e., Hafnia and KRAKATAU STEEL go up and down completely randomly.

Pair Corralation between Hafnia and KRAKATAU STEEL

If you would invest  457.00  in Hafnia Limited on September 24, 2024 and sell it today you would earn a total of  41.00  from holding Hafnia Limited or generate 8.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

Hafnia Limited  vs.  KRAKATAU STEEL B

Hafnia Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hafnia Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

KRAKATAU STEEL B

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KRAKATAU STEEL B are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, KRAKATAU STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hafnia and KRAKATAU STEEL

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

The idea behind Hafnia Limited and KRAKATAU STEEL B 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.