Correlation Between Hafnia and Stepan
Can any of the company-specific risk be diversified away by investing in both Hafnia and Stepan 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 Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hafnia Limited and Stepan Company, you can compare the effects of market volatilities on Hafnia and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hafnia and Stepan.
Diversification Opportunities for Hafnia and Stepan
Good diversification
The 3 months correlation between Hafnia and Stepan is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Hafnia i.e., Hafnia and Stepan go up and down completely randomly.
Pair Corralation between Hafnia and Stepan
Given the investment horizon of 90 days Hafnia Limited is expected to generate 2.22 times more return on investment than Stepan. However, Hafnia is 2.22 times more volatile than Stepan Company. It trades about 0.2 of its potential returns per unit of risk. Stepan Company is currently generating about -0.07 per unit of risk. If you would invest 483.00 in Hafnia Limited on September 13, 2024 and sell it today you would earn a total of 53.00 from holding Hafnia Limited or generate 10.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hafnia Limited vs. Stepan Company
Performance |
| Timeline |
| Hafnia Limited |
| Stepan Company |
Hafnia and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hafnia and Stepan
The main advantage of trading using opposite Hafnia and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hafnia position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Hafnia vs. Vestis | Hafnia vs. Artisan Partners Asset | Hafnia vs. Global Ship Lease | Hafnia vs. Freedom Bank of |
| Stepan vs. LyondellBasell Industries NV | Stepan vs. International Flavors Fragrances | Stepan vs. Cabot | Stepan vs. Westlake Chemical |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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