Correlation Between Teekay Tankers and Hafnia

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

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

Diversification Opportunities for Teekay Tankers and Hafnia

0.91

Correlation Coefficient

Teekay Tankers  Hafnia

Almost no diversification

The 3 months correlation between Teekay and Hafnia is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Teekay Tankers and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Teekay Tankers 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 Teekay Tankers 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 Teekay Tankers i.e., Teekay Tankers and Hafnia go up and down completely randomly.

Pair Corralation between Teekay Tankers and Hafnia

Considering the 90-day investment horizon Teekay Tankers is expected to under-perform the Hafnia. But the stock apears to be less risky and, when comparing its historical volatility, Teekay Tankers is 1.28 times less risky than Hafnia. The stock trades about -0.27 of its potential returns per unit of risk. The Hafnia Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  501.00  in Hafnia Limited on September 24, 2024 and sell it today you would earn a total of  19.00  from holding Hafnia Limited or generate 3.79% return on investment over 90 days.

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

Teekay Tankers  vs.  Hafnia Limited

Teekay Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teekay Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 fragile 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 Teekay Tankers and Hafnia

The main advantage of trading using opposite Teekay Tankers and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teekay Tankers 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 Teekay Tankers 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.