Correlation Between Hafnia and Procter Gamble

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

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

Diversification Opportunities for Hafnia and Procter Gamble

-0.05

Correlation Coefficient

Hafnia  Procter Gamble

Good diversification

The 3 months correlation between Hafnia and Procter is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Hafnia i.e., Hafnia and Procter Gamble go up and down completely randomly.

Pair Corralation between Hafnia and Procter Gamble

Given the investment horizon of 90 days Hafnia Limited is expected to generate 2.91 times more return on investment than Procter Gamble. However, Hafnia is 2.91 times more volatile than Procter Gamble. It trades about 0.05 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.04 per unit of risk. If you would invest  371.00  in Hafnia Limited on October 4, 2024 and sell it today you would earn a total of  192.00  from holding Hafnia Limited or generate 51.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.86%
Values	Daily Returns

Hafnia Limited  vs.  Procter Gamble

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 unsteady 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.

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hafnia and Procter Gamble

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

The idea behind Hafnia Limited and Procter Gamble 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.