Correlation Between Sellas Life and Hafnia

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

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

Diversification Opportunities for Sellas Life and Hafnia

-0.56

Correlation Coefficient

Sellas Life  Hafnia

Excellent diversification

The 3 months correlation between Sellas and Hafnia is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sellas Life Sciences and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Sellas Life 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 Sellas Life Sciences 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 Sellas Life i.e., Sellas Life and Hafnia go up and down completely randomly.

Pair Corralation between Sellas Life and Hafnia

Considering the 90-day investment horizon Sellas Life Sciences is expected to under-perform the Hafnia. In addition to that, Sellas Life is 2.36 times more volatile than Hafnia Limited. It trades about -0.01 of its total potential returns per unit of risk. Hafnia Limited is currently generating about 0.1 per unit of volatility. If you would invest  414.00  in Hafnia Limited on October 26, 2024 and sell it today you would earn a total of  416.00  from holding Hafnia Limited or generate 100.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.62%
Values	Daily Returns

Sellas Life Sciences  vs.  Hafnia Limited

Sellas Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sellas Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm 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. Despite nearly stable basic indicators, Hafnia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sellas Life and Hafnia

The main advantage of trading using opposite Sellas Life and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sellas Life 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 Sellas Life Sciences 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.