Correlation Between Hafnia and Lululemon Athletica

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

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

Diversification Opportunities for Hafnia and Lululemon Athletica

-0.6

Correlation Coefficient

Hafnia  Lululemon Athletica

Excellent diversification

The 3 months correlation between Hafnia and Lululemon is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica 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 Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of Hafnia i.e., Hafnia and Lululemon Athletica go up and down completely randomly.

Pair Corralation between Hafnia and Lululemon Athletica

Given the investment horizon of 90 days Hafnia Limited is expected to generate 1.57 times more return on investment than Lululemon Athletica. However, Hafnia is 1.57 times more volatile than Lululemon Athletica. It trades about 0.12 of its potential returns per unit of risk. Lululemon Athletica is currently generating about -0.22 per unit of risk. If you would invest  526.00  in Hafnia Limited on October 8, 2024 and sell it today you would earn a total of  29.00  from holding Hafnia Limited or generate 5.51% 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.  Lululemon Athletica

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 inconsistent 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.

Lululemon Athletica

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lululemon Athletica are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Lululemon Athletica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hafnia and Lululemon Athletica

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

The idea behind Hafnia Limited and Lululemon Athletica 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.