Correlation Between International Seaways and Hafnia

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

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

Diversification Opportunities for International Seaways and Hafnia

0.89

Correlation Coefficient

International Seaways  Hafnia

Very poor diversification

The 3 months correlation between International and Hafnia is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding International Seaways and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and International Seaways 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 International Seaways 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 International Seaways i.e., International Seaways and Hafnia go up and down completely randomly.

Pair Corralation between International Seaways and Hafnia

Given the investment horizon of 90 days International Seaways is expected to under-perform the Hafnia. But the stock apears to be less risky and, when comparing its historical volatility, International Seaways is 1.16 times less risky than Hafnia. The stock trades about -0.26 of its potential returns per unit of risk. The Hafnia Limited is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  715.00  in Hafnia Limited on September 16, 2024 and sell it today you would lose (173.00) from holding Hafnia Limited or give up 24.2% of portfolio value over 90 days.

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

International Seaways  vs.  Hafnia Limited

International Seaways

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Seaways has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 abnormal 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.

Pair Trading with International Seaways and Hafnia

The main advantage of trading using opposite International Seaways and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Seaways 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.

The idea behind International Seaways and Hafnia 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.