Correlation Between Hafnia and Gushen

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

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

Diversification Opportunities for Hafnia and Gushen

-0.3

Correlation Coefficient

Hafnia  Gushen

Very good diversification

The 3 months correlation between Hafnia and Gushen is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Gushen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gushen Inc 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 Gushen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gushen Inc has no effect on the direction of Hafnia i.e., Hafnia and Gushen go up and down completely randomly.

Pair Corralation between Hafnia and Gushen

Given the investment horizon of 90 days Hafnia Limited is expected to generate 1.56 times more return on investment than Gushen. However, Hafnia is 1.56 times more volatile than Gushen Inc. It trades about 0.05 of its potential returns per unit of risk. Gushen Inc is currently generating about 0.01 per unit of risk. If you would invest  397.00  in Hafnia Limited on October 5, 2024 and sell it today you would earn a total of  158.00  from holding Hafnia Limited or generate 39.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	20.61%
Values	Daily Returns

Hafnia Limited  vs.  Gushen Inc

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

Gushen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gushen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Gushen is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hafnia and Gushen

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

The idea behind Hafnia Limited and Gushen Inc 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.