Correlation Between Hafnia and Everest
Can any of the company-specific risk be diversified away by investing in both Hafnia and Everest 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 Hafnia and Everest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hafnia Limited and Everest Group, you can compare the effects of market volatilities on Hafnia and Everest 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 Hafnia with a short position of Everest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hafnia and Everest.
Diversification Opportunities for Hafnia and Everest
Very weak diversification
The 3 months correlation between Hafnia and Everest is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Everest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everest Group and Hafnia 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 Hafnia Limited are associated (or correlated) with Everest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everest Group has no effect on the direction of Hafnia i.e., Hafnia and Everest go up and down completely randomly.
Pair Corralation between Hafnia and Everest
Given the investment horizon of 90 days Hafnia Limited is expected to under-perform the Everest. In addition to that, Hafnia is 2.14 times more volatile than Everest Group. It trades about -0.01 of its total potential returns per unit of risk. Everest Group is currently generating about 0.39 per unit of volatility. If you would invest 34,775 in Everest Group on September 4, 2024 and sell it today you would earn a total of 3,598 from holding Everest Group or generate 10.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hafnia Limited vs. Everest Group
Performance |
| Timeline |
| Hafnia Limited |
| Everest Group |
Hafnia and Everest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hafnia and Everest
The main advantage of trading using opposite Hafnia and Everest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hafnia position performs unexpectedly, Everest 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 Everest will offset losses from the drop in Everest's long position.| Hafnia vs. Axalta Coating Systems | Hafnia vs. NL Industries | Hafnia vs. Chemours Co | Hafnia vs. CVR Partners LP |
| Everest vs. Abcellera Biologics | Everest vs. Centessa Pharmaceuticals PLC | Everest vs. Tscan Therapeutics | Everest vs. Sellas Life Sciences |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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