Correlation Between Hafnia and Texas Roadhouse

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

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

Diversification Opportunities for Hafnia and Texas Roadhouse

-0.92

Correlation Coefficient

Hafnia  Texas Roadhouse

Pay attention - limited upside

The 3 months correlation between Hafnia and Texas is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hafnia Limited and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse 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 Texas Roadhouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Roadhouse has no effect on the direction of Hafnia i.e., Hafnia and Texas Roadhouse go up and down completely randomly.

Pair Corralation between Hafnia and Texas Roadhouse

Given the investment horizon of 90 days Hafnia Limited is expected to generate 1.62 times more return on investment than Texas Roadhouse. However, Hafnia is 1.62 times more volatile than Texas Roadhouse. It trades about 0.15 of its potential returns per unit of risk. Texas Roadhouse is currently generating about -0.17 per unit of risk. If you would invest  505.00  in Hafnia Limited on September 15, 2024 and sell it today you would earn a total of  37.00  from holding Hafnia Limited or generate 7.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Hafnia Limited  vs.  Texas Roadhouse

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 inconsistent 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.

Texas Roadhouse

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Hafnia and Texas Roadhouse

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

The idea behind Hafnia Limited and Texas Roadhouse 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.