Correlation Between Hafnia and Sun Country

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

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

Diversification Opportunities for Hafnia and Sun Country

-0.94

Correlation Coefficient

Hafnia  Sun Country

Pay attention - limited upside

The 3 months correlation between Hafnia and Sun is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines 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 Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of Hafnia i.e., Hafnia and Sun Country go up and down completely randomly.

Pair Corralation between Hafnia and Sun Country

Given the investment horizon of 90 days Hafnia Limited is expected to generate 0.66 times more return on investment than Sun Country. However, Hafnia Limited is 1.51 times less risky than Sun Country. It trades about 0.02 of its potential returns per unit of risk. Sun Country Airlines is currently generating about -0.01 per unit of risk. If you would invest  537.00  in Hafnia Limited on September 2, 2024 and sell it today you would earn a total of  32.00  from holding Hafnia Limited or generate 5.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Hafnia Limited  vs.  Sun Country Airlines

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 weak 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.

Sun Country Airlines

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Hafnia and Sun Country

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

The idea behind Hafnia Limited and Sun Country Airlines 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.