Correlation Between Meta Platforms and Hafnia
Can any of the company-specific risk be diversified away by investing in both Meta Platforms 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 Meta Platforms and Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Hafnia Limited, you can compare the effects of market volatilities on Meta Platforms 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 Meta Platforms with a short position of Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Hafnia.
Diversification Opportunities for Meta Platforms and Hafnia
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meta and Hafnia is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Meta Platforms 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 Meta Platforms 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 Meta Platforms i.e., Meta Platforms and Hafnia go up and down completely randomly.
Pair Corralation between Meta Platforms and Hafnia
Given the investment horizon of 90 days Meta Platforms is expected to generate 0.93 times more return on investment than Hafnia. However, Meta Platforms is 1.08 times less risky than Hafnia. It trades about 0.14 of its potential returns per unit of risk. Hafnia Limited is currently generating about 0.09 per unit of risk. If you would invest 12,908 in Meta Platforms on August 31, 2024 and sell it today you would earn a total of 44,524 from holding Meta Platforms or generate 344.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 74.9% |
| Values | Daily Returns |
Meta Platforms vs. Hafnia Limited
Performance |
| Timeline |
| Meta Platforms |
| Hafnia Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Meta Platforms and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Hafnia
The main advantage of trading using opposite Meta Platforms and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms 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.| Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc |
| Hafnia vs. MGIC Investment Corp | Hafnia vs. Aegon NV ADR | Hafnia vs. Assurant | Hafnia vs. Kinsale Capital Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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