Correlation Between Hafnia and CAPITAL

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

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

Diversification Opportunities for Hafnia and CAPITAL

0.35

Correlation Coefficient

Hafnia  CAPITAL

Weak diversification

The 3 months correlation between Hafnia and CAPITAL is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and CAPITAL ONE FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAPITAL ONE FINL 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 CAPITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAPITAL ONE FINL has no effect on the direction of Hafnia i.e., Hafnia and CAPITAL go up and down completely randomly.

Pair Corralation between Hafnia and CAPITAL

Given the investment horizon of 90 days Hafnia Limited is expected to generate 5.46 times more return on investment than CAPITAL. However, Hafnia is 5.46 times more volatile than CAPITAL ONE FINL. It trades about 0.01 of its potential returns per unit of risk. CAPITAL ONE FINL is currently generating about 0.02 per unit of risk. If you would invest  397.00  in Hafnia Limited on December 2, 2024 and sell it today you would earn a total of  9.00  from holding Hafnia Limited or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.65%
Values	Daily Returns

Hafnia Limited  vs.  CAPITAL ONE FINL

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

CAPITAL ONE FINL

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAPITAL ONE FINL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CAPITAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hafnia and CAPITAL

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

The idea behind Hafnia Limited and CAPITAL ONE FINL 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.