Correlation Between Verra Mobility and Hafnia

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

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

Diversification Opportunities for Verra Mobility and Hafnia

-0.31

Correlation Coefficient

Verra Mobility  Hafnia

Very good diversification

The 3 months correlation between Verra and Hafnia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Verra Mobility Corp and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Verra Mobility 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 Verra Mobility Corp 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 Verra Mobility i.e., Verra Mobility and Hafnia go up and down completely randomly.

Pair Corralation between Verra Mobility and Hafnia

Given the investment horizon of 90 days Verra Mobility is expected to generate 1.28 times less return on investment than Hafnia. In addition to that, Verra Mobility is 1.47 times more volatile than Hafnia Limited. It trades about 0.14 of its total potential returns per unit of risk. Hafnia Limited is currently generating about 0.27 per unit of volatility. If you would invest  738.00  in Hafnia Limited on February 4, 2024 and sell it today you would earn a total of  50.00  from holding Hafnia Limited or generate 6.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

Verra Mobility Corp  vs.  Hafnia Limited

Verra Mobility Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Verra Mobility Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Verra Mobility displayed solid returns over the last few months and may actually be approaching a breakup point.

Hafnia Limited

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hafnia Limited are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Hafnia displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verra Mobility and Hafnia

The main advantage of trading using opposite Verra Mobility and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verra Mobility 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 Verra Mobility Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.