Correlation Between NVIDIA and Hafnia
Can any of the company-specific risk be diversified away by investing in both NVIDIA 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 NVIDIA and Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Hafnia Limited, you can compare the effects of market volatilities on NVIDIA 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 NVIDIA with a short position of Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Hafnia.
Diversification Opportunities for NVIDIA and Hafnia
Very poor diversification
The 3 months correlation between NVIDIA and Hafnia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and NVIDIA 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 NVIDIA 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 NVIDIA i.e., NVIDIA and Hafnia go up and down completely randomly.
Pair Corralation between NVIDIA and Hafnia
Given the investment horizon of 90 days NVIDIA is expected to generate 1.22 times more return on investment than Hafnia. However, NVIDIA is 1.22 times more volatile than Hafnia Limited. It trades about 0.16 of its potential returns per unit of risk. Hafnia Limited is currently generating about 0.09 per unit of risk. If you would invest 1,562 in NVIDIA on August 31, 2024 and sell it today you would earn a total of 12,263 from holding NVIDIA or generate 785.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 74.9% |
| Values | Daily Returns |
NVIDIA vs. Hafnia Limited
Performance |
| Timeline |
| NVIDIA |
| Hafnia Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NVIDIA and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Hafnia
The main advantage of trading using opposite NVIDIA and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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