Correlation Between Hafnia and Pure Cycle

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Can any of the company-specific risk be diversified away by investing in both Hafnia and Pure Cycle 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 Pure Cycle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hafnia Limited and Pure Cycle, you can compare the effects of market volatilities on Hafnia and Pure Cycle 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 Pure Cycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hafnia and Pure Cycle.

Diversification Opportunities for Hafnia and Pure Cycle

HafniaPureDiversified AwayHafniaPureDiversified Away100%
-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Hafnia and Pure is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Pure Cycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Cycle 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 Pure Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Cycle has no effect on the direction of Hafnia i.e., Hafnia and Pure Cycle go up and down completely randomly.

Pair Corralation between Hafnia and Pure Cycle

Given the investment horizon of 90 days Hafnia Limited is expected to under-perform the Pure Cycle. But the stock apears to be less risky and, when comparing its historical volatility, Hafnia Limited is 1.16 times less risky than Pure Cycle. The stock trades about -0.12 of its potential returns per unit of risk. The Pure Cycle is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,062  in Pure Cycle on October 6, 2024 and sell it today you would earn a total of  195.00  from holding Pure Cycle or generate 18.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Hafnia Limited  vs.  Pure Cycle

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-100102030
JavaScript chart by amCharts 3.21.15HAFN PCYO
       Timeline  
Hafnia Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 fragile 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan55.566.57
Pure Cycle 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Pure Cycle are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Pure Cycle displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan10.51111.51212.51313.51414.5

Hafnia and Pure Cycle Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.9-2.92-1.94-0.960.00.861.762.653.554.44 0.0450.0500.0550.0600.0650.070
JavaScript chart by amCharts 3.21.15HAFN PCYO
       Returns  

Pair Trading with Hafnia and Pure Cycle

The main advantage of trading using opposite Hafnia and Pure Cycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hafnia position performs unexpectedly, Pure Cycle 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 Pure Cycle will offset losses from the drop in Pure Cycle's long position.
The idea behind Hafnia Limited and Pure Cycle 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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