Correlation Between Hafnia and Empresa Distribuidora

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

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

Diversification Opportunities for Hafnia and Empresa Distribuidora

-0.77

Correlation Coefficient

Hafnia  Empresa Distribuidora

Pay attention - limited upside

The 3 months correlation between Hafnia and Empresa is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora and Hafnia 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 Hafnia Limited are associated (or correlated) with Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of Hafnia i.e., Hafnia and Empresa Distribuidora go up and down completely randomly.

Pair Corralation between Hafnia and Empresa Distribuidora

Given the investment horizon of 90 days Hafnia Limited is expected to under-perform the Empresa Distribuidora. But the stock apears to be less risky and, when comparing its historical volatility, Hafnia Limited is 1.37 times less risky than Empresa Distribuidora. The stock trades about -0.12 of its potential returns per unit of risk. The Empresa Distribuidora y is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,678  in Empresa Distribuidora y on September 21, 2024 and sell it today you would earn a total of  2,556  from holding Empresa Distribuidora y or generate 152.32% return on investment over 90 days.

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

Hafnia Limited  vs.  Empresa Distribuidora y

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 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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Empresa Distribuidora

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Empresa Distribuidora y are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Empresa Distribuidora displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hafnia and Empresa Distribuidora

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

The idea behind Hafnia Limited and Empresa Distribuidora y 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.