The expression "hang loose" is a verbal representation of the Hawaiian hand-gesture known as the shaka sign. It is associated with Hawaiian culture and the surfing sub-culture, notes About.com.Know More
The shaka sign is used as a greeting or as an expression of appreciation by native Hawaiians. It is made by curling the first three fingers of the hand into the palm while simultaneously extending the thumb and pinkie finger. When making the gesture the hand is customarily rotated a few times. It was exported to the rest of the world by surfers visiting Hawaii. It subsequently became associated with the verbal expressions of "hang ten" for surfers and "hang loose" for both surfing and hang-glider enthusiasts.