Correlation Between Texas Roadhouse and Hafnia

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

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

Diversification Opportunities for Texas Roadhouse and Hafnia

-0.92

Correlation Coefficient

Texas Roadhouse  Hafnia

Pay attention - limited upside

The 3 months correlation between Texas and Hafnia is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Texas Roadhouse 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 Texas Roadhouse 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 Texas Roadhouse i.e., Texas Roadhouse and Hafnia go up and down completely randomly.

Pair Corralation between Texas Roadhouse and Hafnia

Given the investment horizon of 90 days Texas Roadhouse is expected to under-perform the Hafnia. But the stock apears to be less risky and, when comparing its historical volatility, Texas Roadhouse is 1.62 times less risky than Hafnia. The stock trades about -0.17 of its potential returns per unit of risk. The Hafnia Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. 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

Texas Roadhouse  vs.  Hafnia Limited

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.

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.

Pair Trading with Texas Roadhouse and Hafnia

The main advantage of trading using opposite Texas Roadhouse and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Roadhouse 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 Texas Roadhouse 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.