Correlation Between Fomento Economico and Hafnia

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

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

Diversification Opportunities for Fomento Economico and Hafnia

-0.87

Correlation Coefficient

Fomento Economico  Hafnia

Pay attention - limited upside

The 3 months correlation between Fomento and Hafnia is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Fomento Economico 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 Fomento Economico Mexicano 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 Fomento Economico i.e., Fomento Economico and Hafnia go up and down completely randomly.

Pair Corralation between Fomento Economico and Hafnia

Considering the 90-day investment horizon Fomento Economico Mexicano is expected to generate 0.51 times more return on investment than Hafnia. However, Fomento Economico Mexicano is 1.96 times less risky than Hafnia. It trades about 0.17 of its potential returns per unit of risk. Hafnia Limited is currently generating about -0.11 per unit of risk. If you would invest  8,438  in Fomento Economico Mexicano on December 29, 2024 and sell it today you would earn a total of  1,482  from holding Fomento Economico Mexicano or generate 17.56% return on investment over 90 days.

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

Fomento Economico Mexicano  vs.  Hafnia Limited

Fomento Economico

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fomento Economico Mexicano are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Fomento Economico showed solid returns over the last few months and may actually be approaching a breakup point.

Hafnia Limited

Risk-Adjusted Performance

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

Pair Trading with Fomento Economico and Hafnia

The main advantage of trading using opposite Fomento Economico and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico 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 Fomento Economico Mexicano 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.