Correlation Between Citizens and Himalaya Shipping

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

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

Diversification Opportunities for Citizens and Himalaya Shipping

-0.39

Correlation Coefficient

Citizens  Himalaya Shipping

Very good diversification

The 3 months correlation between Citizens and Himalaya is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and Himalaya Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himalaya Shipping and Citizens 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 Citizens are associated (or correlated) with Himalaya Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Himalaya Shipping has no effect on the direction of Citizens i.e., Citizens and Himalaya Shipping go up and down completely randomly.

Pair Corralation between Citizens and Himalaya Shipping

Considering the 90-day investment horizon Citizens is expected to generate 2.07 times more return on investment than Himalaya Shipping. However, Citizens is 2.07 times more volatile than Himalaya Shipping. It trades about 0.15 of its potential returns per unit of risk. Himalaya Shipping is currently generating about -0.08 per unit of risk. If you would invest  304.00  in Citizens on September 3, 2024 and sell it today you would earn a total of  144.00  from holding Citizens or generate 47.37% return on investment over 90 days.

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

Citizens  vs.  Himalaya Shipping

Citizens

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Citizens sustained solid returns over the last few months and may actually be approaching a breakup point.

Himalaya Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Himalaya Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Citizens and Himalaya Shipping

The main advantage of trading using opposite Citizens and Himalaya Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens position performs unexpectedly, Himalaya Shipping 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 Himalaya Shipping will offset losses from the drop in Himalaya Shipping's long position.

The idea behind Citizens and Himalaya Shipping 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.

Check out your portfolio center.

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.