Correlation Between United Parks and Hafnia

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

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

Diversification Opportunities for United Parks and Hafnia

-0.27

Correlation Coefficient

United Parks  Hafnia

Very good diversification

The 3 months correlation between United and Hafnia is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Parks Resorts and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and United Parks 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 United Parks Resorts are associated (or correlated) with Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of United Parks i.e., United Parks and Hafnia go up and down completely randomly.

Pair Corralation between United Parks and Hafnia

Given the investment horizon of 90 days United Parks Resorts is expected to generate 0.75 times more return on investment than Hafnia. However, United Parks Resorts is 1.34 times less risky than Hafnia. It trades about 0.01 of its potential returns per unit of risk. Hafnia Limited is currently generating about -0.08 per unit of risk. If you would invest  5,218  in United Parks Resorts on October 24, 2024 and sell it today you would lose (20.00) from holding United Parks Resorts or give up 0.38% of portfolio value over 90 days.

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

United Parks Resorts  vs.  Hafnia Limited

United Parks Resorts

Risk-Adjusted Performance

0 of 100

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 comparatively stable forward-looking signals, United Parks is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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

Pair Trading with United Parks and Hafnia

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

The idea behind United Parks Resorts and Hafnia Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.