Correlation Between Nexstar Broadcasting and Hafnia

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

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

Diversification Opportunities for Nexstar Broadcasting and Hafnia

-0.41

Correlation Coefficient

Nexstar Broadcasting  Hafnia

Very good diversification

The 3 months correlation between Nexstar and Hafnia is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting Group and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Nexstar Broadcasting 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 Nexstar Broadcasting Group 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 Nexstar Broadcasting i.e., Nexstar Broadcasting and Hafnia go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and Hafnia

Given the investment horizon of 90 days Nexstar Broadcasting is expected to generate 6.47 times less return on investment than Hafnia. But when comparing it to its historical volatility, Nexstar Broadcasting Group is 1.29 times less risky than Hafnia. It trades about 0.01 of its potential returns per unit of risk. Hafnia Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  397.00  in Hafnia Limited on August 23, 2024 and sell it today you would earn a total of  170.00  from holding Hafnia Limited or generate 42.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.64%
Values	Daily Returns

Nexstar Broadcasting Group  vs.  Hafnia Limited

Nexstar Broadcasting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexstar Broadcasting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nexstar Broadcasting is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private 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 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 December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Nexstar Broadcasting and Hafnia

The main advantage of trading using opposite Nexstar Broadcasting and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexstar Broadcasting 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 Nexstar Broadcasting Group 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.