Correlation Between Belships and Hafnia
Can any of the company-specific risk be diversified away by investing in both Belships 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 Belships and Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Belships and Hafnia, you can compare the effects of market volatilities on Belships 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 Belships with a short position of Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belships and Hafnia.
Diversification Opportunities for Belships and Hafnia
Weak diversification
The 3 months correlation between Belships and Hafnia is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Belships and Hafnia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia and Belships 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 Belships 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 has no effect on the direction of Belships i.e., Belships and Hafnia go up and down completely randomly.
Pair Corralation between Belships and Hafnia
Assuming the 90 days trading horizon Belships is expected to generate 0.91 times more return on investment than Hafnia. However, Belships is 1.1 times less risky than Hafnia. It trades about -0.04 of its potential returns per unit of risk. Hafnia is currently generating about -0.2 per unit of risk. If you would invest 1,756 in Belships on August 29, 2024 and sell it today you would lose (38.00) from holding Belships or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Belships vs. Hafnia
Performance |
| Timeline |
| Belships |
| Hafnia |
Belships and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Belships and Hafnia
The main advantage of trading using opposite Belships and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Belships 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.| Belships vs. Shelf Drilling | Belships vs. Solstad Offsho | Belships vs. Eidesvik Offshore ASA | Belships vs. Elkem ASA |
| Hafnia vs. Shelf Drilling | Hafnia vs. Solstad Offsho | Hafnia vs. Eidesvik Offshore ASA | Hafnia vs. Elkem ASA |
Check out your portfolio center.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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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