Correlation Between Hafnia and Telesis Bio

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

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

Diversification Opportunities for Hafnia and Telesis Bio

0.65

Correlation Coefficient

Hafnia  Telesis Bio

Poor diversification

The 3 months correlation between Hafnia and Telesis is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Telesis Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telesis Bio 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 Telesis Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telesis Bio has no effect on the direction of Hafnia i.e., Hafnia and Telesis Bio go up and down completely randomly.

Pair Corralation between Hafnia and Telesis Bio

Given the investment horizon of 90 days Hafnia Limited is expected to under-perform the Telesis Bio. But the stock apears to be less risky and, when comparing its historical volatility, Hafnia Limited is 14.68 times less risky than Telesis Bio. The stock trades about -0.16 of its potential returns per unit of risk. The Telesis Bio is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  355.00  in Telesis Bio on September 4, 2024 and sell it today you would lose (57.00) from holding Telesis Bio or give up 16.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	35.94%
Values	Daily Returns

Hafnia Limited  vs.  Telesis Bio

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Telesis Bio

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Telesis Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile forward indicators, Telesis Bio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hafnia and Telesis Bio

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

The idea behind Hafnia Limited and Telesis Bio 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.