Correlation Between Hafnia and EMBARQ

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

By analyzing existing cross correlation between Hafnia Limited and EMBARQ P 7995, you can compare the effects of market volatilities on Hafnia and EMBARQ 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 EMBARQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hafnia and EMBARQ.

Diversification Opportunities for Hafnia and EMBARQ

-0.4

Correlation Coefficient

Hafnia  EMBARQ

Very good diversification

The 3 months correlation between Hafnia and EMBARQ is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and EMBARQ P 7995 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBARQ P 7995 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 EMBARQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBARQ P 7995 has no effect on the direction of Hafnia i.e., Hafnia and EMBARQ go up and down completely randomly.

Pair Corralation between Hafnia and EMBARQ

Given the investment horizon of 90 days Hafnia is expected to generate 1.84 times less return on investment than EMBARQ. But when comparing it to its historical volatility, Hafnia Limited is 1.22 times less risky than EMBARQ. It trades about 0.13 of its potential returns per unit of risk. EMBARQ P 7995 is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  5,059  in EMBARQ P 7995 on October 8, 2024 and sell it today you would earn a total of  572.00  from holding EMBARQ P 7995 or generate 11.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hafnia Limited  vs.  EMBARQ P 7995

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

EMBARQ P 7995

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMBARQ P 7995 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for EMBARQ P 7995 investors.

Pair Trading with Hafnia and EMBARQ

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

The idea behind Hafnia Limited and EMBARQ P 7995 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.