Correlation Between Transportadora and Hafnia

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

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

Diversification Opportunities for Transportadora and Hafnia

-0.81

Correlation Coefficient

Transportadora  Hafnia

Pay attention - limited upside

The 3 months correlation between Transportadora and Hafnia is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and Hafnia go up and down completely randomly.

Pair Corralation between Transportadora and Hafnia

Considering the 90-day investment horizon Transportadora de Gas is expected to under-perform the Hafnia. But the stock apears to be less risky and, when comparing its historical volatility, Transportadora de Gas is 1.01 times less risky than Hafnia. The stock trades about -0.09 of its potential returns per unit of risk. The Hafnia Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Hafnia Limited on September 21, 2024 and sell it today you would lose (15.00) from holding Hafnia Limited or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Transportadora de Gas  vs.  Hafnia Limited

Transportadora de Gas

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Transportadora and Hafnia

The main advantage of trading using opposite Transportadora and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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 Transportadora de Gas 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.