Correlation Between Borr Drilling and Hafnia

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

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

Diversification Opportunities for Borr Drilling and Hafnia

0.9

Correlation Coefficient

Borr Drilling  Hafnia

Almost no diversification

The 3 months correlation between Borr and Hafnia is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Borr Drilling 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 Borr Drilling 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 Borr Drilling i.e., Borr Drilling and Hafnia go up and down completely randomly.

Pair Corralation between Borr Drilling and Hafnia

Given the investment horizon of 90 days Borr Drilling is expected to generate 5.9 times less return on investment than Hafnia. In addition to that, Borr Drilling is 1.25 times more volatile than Hafnia Limited. It trades about 0.01 of its total potential returns per unit of risk. Hafnia Limited is currently generating about 0.07 per unit of volatility. If you would invest  523.00  in Hafnia Limited on October 8, 2024 and sell it today you would earn a total of  32.00  from holding Hafnia Limited or generate 6.12% return on investment over 90 days.

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

Borr Drilling  vs.  Hafnia Limited

Borr Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Borr Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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

Pair Trading with Borr Drilling and Hafnia

The main advantage of trading using opposite Borr Drilling and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borr Drilling 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 Borr Drilling 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.