Correlation Between Hafnia and Hongli Group
Can any of the company-specific risk be diversified away by investing in both Hafnia and Hongli Group 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 Hongli Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hafnia Limited and Hongli Group Ordinary, you can compare the effects of market volatilities on Hafnia and Hongli Group 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 Hongli Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hafnia and Hongli Group.
Diversification Opportunities for Hafnia and Hongli Group
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hafnia and Hongli is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Hongli Group Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongli Group Ordinary 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 Hongli Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongli Group Ordinary has no effect on the direction of Hafnia i.e., Hafnia and Hongli Group go up and down completely randomly.
Pair Corralation between Hafnia and Hongli Group
Given the investment horizon of 90 days Hafnia Limited is expected to generate 0.35 times more return on investment than Hongli Group. However, Hafnia Limited is 2.83 times less risky than Hongli Group. It trades about 0.04 of its potential returns per unit of risk. Hongli Group Ordinary is currently generating about 0.01 per unit of risk. If you would invest 411.00 in Hafnia Limited on September 3, 2024 and sell it today you would earn a total of 158.00 from holding Hafnia Limited or generate 38.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.62% |
| Values | Daily Returns |
Hafnia Limited vs. Hongli Group Ordinary
Performance |
| Timeline |
| Hafnia Limited |
| Hongli Group Ordinary |
Hafnia and Hongli Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hafnia and Hongli Group
The main advantage of trading using opposite Hafnia and Hongli Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hafnia position performs unexpectedly, Hongli Group 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 Hongli Group will offset losses from the drop in Hongli Group's long position.| Hafnia vs. Triton International Limited | Hafnia vs. Avis Budget Group | Hafnia vs. Videolocity International | Hafnia vs. Xponential Fitness |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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