Correlation Between 62886EAY4 and Hafnia

Can any of the company-specific risk be diversified away by investing in both 62886EAY4 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 62886EAY4 and Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NCR P NEW and Hafnia Limited, you can compare the effects of market volatilities on 62886EAY4 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 62886EAY4 with a short position of Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of 62886EAY4 and Hafnia.

Diversification Opportunities for 62886EAY4 and Hafnia

0.29

Correlation Coefficient

62886EAY4  Hafnia

Modest diversification

The 3 months correlation between 62886EAY4 and Hafnia is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NCR P NEW and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and 62886EAY4 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 NCR P NEW 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 62886EAY4 i.e., 62886EAY4 and Hafnia go up and down completely randomly.

Pair Corralation between 62886EAY4 and Hafnia

Assuming the 90 days trading horizon 62886EAY4 is expected to generate 1.78 times less return on investment than Hafnia. But when comparing it to its historical volatility, NCR P NEW is 2.75 times less risky than Hafnia. It trades about 0.03 of its potential returns per unit of risk. Hafnia Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  514.00  in Hafnia Limited on September 28, 2024 and sell it today you would earn a total of  30.00  from holding Hafnia Limited or generate 5.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.66%
Values	Daily Returns

NCR P NEW  vs.  Hafnia Limited

NCR P NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCR P NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 62886EAY4 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the 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 weak 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 62886EAY4 and Hafnia

The main advantage of trading using opposite 62886EAY4 and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 62886EAY4 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 NCR P NEW 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.