Correlation Between UL Solutions and Hafnia
Can any of the company-specific risk be diversified away by investing in both UL Solutions 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 UL Solutions and Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UL Solutions and Hafnia Limited, you can compare the effects of market volatilities on UL Solutions 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 UL Solutions with a short position of Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of UL Solutions and Hafnia.
Diversification Opportunities for UL Solutions and Hafnia
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ULS and Hafnia is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding UL Solutions and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and UL Solutions 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 UL Solutions 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 UL Solutions i.e., UL Solutions and Hafnia go up and down completely randomly.
Pair Corralation between UL Solutions and Hafnia
Considering the 90-day investment horizon UL Solutions is expected to generate 1.2 times more return on investment than Hafnia. However, UL Solutions is 1.2 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 -0.06 per unit of risk. If you would invest 2,791 in UL Solutions on September 4, 2024 and sell it today you would earn a total of 2,491 from holding UL Solutions or generate 89.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.2% |
| Values | Daily Returns |
UL Solutions vs. Hafnia Limited
Performance |
| Timeline |
| UL Solutions |
| Hafnia Limited |
UL Solutions and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UL Solutions and Hafnia
The main advantage of trading using opposite UL Solutions and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UL Solutions 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.| UL Solutions vs. Sun Life Financial | UL Solutions vs. Playtika Holding Corp | UL Solutions vs. Ainsworth Game Technology | UL Solutions vs. NetEase |
| Hafnia vs. Axalta Coating Systems | Hafnia vs. NL Industries | Hafnia vs. Chemours Co | Hafnia vs. CVR Partners LP |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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