Correlation Between Aegon NV and Hafnia

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

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

Diversification Opportunities for Aegon NV and Hafnia

-0.59

Correlation Coefficient

Aegon NV  Hafnia

Excellent diversification

The 3 months correlation between Aegon and Hafnia is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Aegon NV 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 Aegon NV ADR are associated (or correlated) with Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of Aegon NV i.e., Aegon NV and Hafnia go up and down completely randomly.

Pair Corralation between Aegon NV and Hafnia

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.64 times more return on investment than Hafnia. However, Aegon NV ADR is 1.56 times less risky than Hafnia. It trades about 0.13 of its potential returns per unit of risk. Hafnia Limited is currently generating about -0.17 per unit of risk. If you would invest  582.00  in Aegon NV ADR on September 3, 2024 and sell it today you would earn a total of  67.00  from holding Aegon NV ADR or generate 11.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aegon NV ADR  vs.  Hafnia Limited

Aegon NV ADR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Aegon NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Aegon NV and Hafnia

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

The idea behind Aegon NV ADR and Hafnia Limited 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.