Correlation Between Charter Communications and Hafnia

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

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

Diversification Opportunities for Charter Communications and Hafnia

-0.89

Correlation Coefficient

Charter Communications  Hafnia

Pay attention - limited upside

The 3 months correlation between Charter and Hafnia is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Hafnia go up and down completely randomly.

Pair Corralation between Charter Communications and Hafnia

Assuming the 90 days horizon Charter Communications is expected to under-perform the Hafnia. But the stock apears to be less risky and, when comparing its historical volatility, Charter Communications is 1.58 times less risky than Hafnia. The stock trades about -0.18 of its potential returns per unit of risk. The Hafnia Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  475.00  in Hafnia Limited on September 23, 2024 and sell it today you would earn a total of  23.00  from holding Hafnia Limited or generate 4.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	54.55%
Values	Daily Returns

Charter Communications  vs.  Hafnia Limited

Charter Communications

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Charter Communications reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Charter Communications and Hafnia

The main advantage of trading using opposite Charter Communications and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.