Correlation Between Hafnia and Network CN
Can any of the company-specific risk be diversified away by investing in both Hafnia and Network CN 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 Network CN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hafnia Limited and Network CN, you can compare the effects of market volatilities on Hafnia and Network CN 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 Network CN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hafnia and Network CN.
Diversification Opportunities for Hafnia and Network CN
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hafnia and Network is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Network CN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network CN 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 Network CN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network CN has no effect on the direction of Hafnia i.e., Hafnia and Network CN go up and down completely randomly.
Pair Corralation between Hafnia and Network CN
Given the investment horizon of 90 days Hafnia is expected to generate 50.87 times less return on investment than Network CN. But when comparing it to its historical volatility, Hafnia Limited is 24.58 times less risky than Network CN. It trades about 0.05 of its potential returns per unit of risk. Network CN is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Network CN on September 12, 2024 and sell it today you would lose (49.00) from holding Network CN or give up 89.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 81.01% |
| Values | Daily Returns |
Hafnia Limited vs. Network CN
Performance |
| Timeline |
| Hafnia Limited |
| Network CN |
Hafnia and Network CN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hafnia and Network CN
The main advantage of trading using opposite Hafnia and Network CN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hafnia position performs unexpectedly, Network CN 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 Network CN will offset losses from the drop in Network CN's long position.The idea behind Hafnia Limited and Network CN 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.| Network CN vs. Anterix | Network CN vs. Grupo Televisa SAB | Network CN vs. Pinterest | Network CN vs. Getty Images Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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