Correlation Between Hafnia and United Parks

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

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

Diversification Opportunities for Hafnia and United Parks

0.76

Correlation Coefficient

Hafnia  United Parks

Poor diversification

The 3 months correlation between Hafnia and United is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Hafnia i.e., Hafnia and United Parks go up and down completely randomly.

Pair Corralation between Hafnia and United Parks

Given the investment horizon of 90 days Hafnia Limited is expected to generate 1.5 times more return on investment than United Parks. However, Hafnia is 1.5 times more volatile than United Parks Resorts. It trades about -0.03 of its potential returns per unit of risk. United Parks Resorts is currently generating about -0.06 per unit of risk. If you would invest  508.00  in Hafnia Limited on December 20, 2024 and sell it today you would lose (51.00) from holding Hafnia Limited or give up 10.04% of portfolio value over 90 days.

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

Hafnia Limited  vs.  United Parks Resorts

Hafnia Limited

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

United Parks Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Parks Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hafnia and United Parks

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

The idea behind Hafnia Limited and United Parks Resorts 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.