Correlation Between United Guardian and Hafnia

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

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

Diversification Opportunities for United Guardian and Hafnia

0.64

Correlation Coefficient

United Guardian  Hafnia

Poor diversification

The 3 months correlation between United and Hafnia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and United Guardian 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 Guardian 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 Guardian i.e., United Guardian and Hafnia go up and down completely randomly.

Pair Corralation between United Guardian and Hafnia

Allowing for the 90-day total investment horizon United Guardian is expected to generate 1.99 times less return on investment than Hafnia. But when comparing it to its historical volatility, United Guardian is 1.81 times less risky than Hafnia. It trades about 0.24 of its potential returns per unit of risk. Hafnia Limited is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  525.00  in Hafnia Limited on October 15, 2024 and sell it today you would earn a total of  67.00  from holding Hafnia Limited or generate 12.76% return on investment over 90 days.

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

United Guardian  vs.  Hafnia Limited

United Guardian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Guardian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 very healthy technical and fundamental indicators, Hafnia is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with United Guardian and Hafnia

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