Correlation Between Hafnia and SMX Public

Can any of the company-specific risk be diversified away by investing in both Hafnia and SMX Public 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 SMX Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hafnia Limited and SMX Public Limited, you can compare the effects of market volatilities on Hafnia and SMX Public 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 SMX Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hafnia and SMX Public.

Diversification Opportunities for Hafnia and SMX Public

-0.05

Correlation Coefficient

Hafnia  SMX Public

Good diversification

The 3 months correlation between Hafnia and SMX is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and SMX Public Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMX Public Limited 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 SMX Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMX Public Limited has no effect on the direction of Hafnia i.e., Hafnia and SMX Public go up and down completely randomly.

Pair Corralation between Hafnia and SMX Public

Given the investment horizon of 90 days Hafnia Limited is expected to under-perform the SMX Public. But the stock apears to be less risky and, when comparing its historical volatility, Hafnia Limited is 13.98 times less risky than SMX Public. The stock trades about -0.14 of its potential returns per unit of risk. The SMX Public Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.82  in SMX Public Limited on September 13, 2024 and sell it today you would lose (0.37) from holding SMX Public Limited or give up 20.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.78%
Values	Daily Returns

Hafnia Limited  vs.  SMX Public Limited

Hafnia Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hafnia Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SMX Public Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SMX Public Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, SMX Public showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hafnia and SMX Public

The main advantage of trading using opposite Hafnia and SMX Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hafnia position performs unexpectedly, SMX Public 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 SMX Public will offset losses from the drop in SMX Public's long position.

The idea behind Hafnia Limited and SMX Public Limited 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.