Correlation Between Global Ship and Hafnia

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

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

Diversification Opportunities for Global Ship and Hafnia

0.04

Correlation Coefficient

Global Ship  Hafnia

Significant diversification

The 3 months correlation between Global and Hafnia is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Hafnia go up and down completely randomly.

Pair Corralation between Global Ship and Hafnia

Assuming the 90 days trading horizon Global Ship Lease is expected to generate 0.28 times more return on investment than Hafnia. However, Global Ship Lease is 3.51 times less risky than Hafnia. It trades about 0.04 of its potential returns per unit of risk. Hafnia Limited is currently generating about -0.2 per unit of risk. If you would invest  2,619  in Global Ship Lease on September 14, 2024 and sell it today you would earn a total of  41.00  from holding Global Ship Lease or generate 1.57% return on investment over 90 days.

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

Global Ship Lease  vs.  Hafnia Limited

Global Ship Lease

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 weak 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 Global Ship and Hafnia

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