Correlation Between Hafnia and ZIM Integrated

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

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

Diversification Opportunities for Hafnia and ZIM Integrated

0.47

Correlation Coefficient

Hafnia  ZIM Integrated

Very weak diversification

The 3 months correlation between Hafnia and ZIM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping 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 ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of Hafnia i.e., Hafnia and ZIM Integrated go up and down completely randomly.

Pair Corralation between Hafnia and ZIM Integrated

Assuming the 90 days horizon Hafnia is expected to generate 1.36 times less return on investment than ZIM Integrated. But when comparing it to its historical volatility, Hafnia Limited is 1.83 times less risky than ZIM Integrated. It trades about 0.08 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in ZIM Integrated Shipping on October 10, 2024 and sell it today you would earn a total of  1,151  from holding ZIM Integrated Shipping or generate 115.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.91%
Values	Daily Returns

Hafnia Limited  vs.  ZIM Integrated Shipping

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. Despite nearly stable basic indicators, Hafnia is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

ZIM Integrated Shipping

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZIM Integrated Shipping are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward indicators, ZIM Integrated displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hafnia and ZIM Integrated

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

The idea behind Hafnia Limited and ZIM Integrated Shipping 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.