Correlation Between Bassett Furniture and Hafnia
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture 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 Bassett Furniture and Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bassett Furniture Industries and Hafnia Limited, you can compare the effects of market volatilities on Bassett Furniture 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 Bassett Furniture with a short position of Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and Hafnia.
Diversification Opportunities for Bassett Furniture and Hafnia
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bassett and Hafnia is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Bassett Furniture 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 Bassett Furniture Industries 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 Bassett Furniture i.e., Bassett Furniture and Hafnia go up and down completely randomly.
Pair Corralation between Bassett Furniture and Hafnia
Given the investment horizon of 90 days Bassett Furniture Industries is expected to generate 0.78 times more return on investment than Hafnia. However, Bassett Furniture Industries is 1.28 times less risky than Hafnia. It trades about 0.06 of its potential returns per unit of risk. Hafnia Limited is currently generating about -0.09 per unit of risk. If you would invest 1,376 in Bassett Furniture Industries on September 5, 2024 and sell it today you would earn a total of 154.00 from holding Bassett Furniture Industries or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. Hafnia Limited
Performance |
| Timeline |
| Bassett Furniture |
| Hafnia Limited |
Bassett Furniture and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and Hafnia
The main advantage of trading using opposite Bassett Furniture and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture 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.| Bassett Furniture vs. Flexsteel Industries | Bassett Furniture vs. Crown Crafts | Bassett Furniture vs. MasterBrand | Bassett Furniture vs. MillerKnoll |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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