Correlation Between 02005NBN9 and Hafnia

Can any of the company-specific risk be diversified away by investing in both 02005NBN9 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 02005NBN9 and Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALLY 47 and Hafnia Limited, you can compare the effects of market volatilities on 02005NBN9 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 02005NBN9 with a short position of Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of 02005NBN9 and Hafnia.

Diversification Opportunities for 02005NBN9 and Hafnia

-0.49

Correlation Coefficient

02005NBN9  Hafnia

Very good diversification

The 3 months correlation between 02005NBN9 and Hafnia is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ALLY 47 and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and 02005NBN9 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 ALLY 47 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 02005NBN9 i.e., 02005NBN9 and Hafnia go up and down completely randomly.

Pair Corralation between 02005NBN9 and Hafnia

Assuming the 90 days trading horizon ALLY 47 is expected to under-perform the Hafnia. In addition to that, 02005NBN9 is 1.03 times more volatile than Hafnia Limited. It trades about -0.07 of its total potential returns per unit of risk. Hafnia Limited is currently generating about -0.03 per unit of volatility. If you would invest  582.00  in Hafnia Limited on October 23, 2024 and sell it today you would lose (39.00) from holding Hafnia Limited or give up 6.7% of portfolio value over 90 days.

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

ALLY 47  vs.  Hafnia Limited

02005NBN9

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLY 47 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ALLY 47 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 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 02005NBN9 and Hafnia

The main advantage of trading using opposite 02005NBN9 and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 02005NBN9 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 ALLY 47 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.