Correlation Between Hafnia and Modine Manufacturing

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

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

Diversification Opportunities for Hafnia and Modine Manufacturing

0.19

Correlation Coefficient

Hafnia  Modine Manufacturing

Average diversification

The 3 months correlation between Hafnia and Modine is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing 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 Modine Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modine Manufacturing has no effect on the direction of Hafnia i.e., Hafnia and Modine Manufacturing go up and down completely randomly.

Pair Corralation between Hafnia and Modine Manufacturing

Given the investment horizon of 90 days Hafnia Limited is expected to generate 0.77 times more return on investment than Modine Manufacturing. However, Hafnia Limited is 1.3 times less risky than Modine Manufacturing. It trades about 0.09 of its potential returns per unit of risk. Modine Manufacturing is currently generating about 0.0 per unit of risk. If you would invest  511.00  in Hafnia Limited on October 7, 2024 and sell it today you would earn a total of  44.00  from holding Hafnia Limited or generate 8.61% return on investment over 90 days.

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

Hafnia Limited  vs.  Modine Manufacturing

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.

Modine Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Modine Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Modine Manufacturing is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hafnia and Modine Manufacturing

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

The idea behind Hafnia Limited and Modine Manufacturing 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.