Correlation Between Eldorado Gold and Himalaya Shipping

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

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

Diversification Opportunities for Eldorado Gold and Himalaya Shipping

0.13

Correlation Coefficient

Eldorado Gold  Himalaya Shipping

Average diversification

The 3 months correlation between Eldorado and Himalaya is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Himalaya Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himalaya Shipping and Eldorado Gold 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 Eldorado Gold Corp 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 Eldorado Gold i.e., Eldorado Gold and Himalaya Shipping go up and down completely randomly.

Pair Corralation between Eldorado Gold and Himalaya Shipping

Considering the 90-day investment horizon Eldorado Gold is expected to generate 1.4 times less return on investment than Himalaya Shipping. In addition to that, Eldorado Gold is 1.04 times more volatile than Himalaya Shipping. It trades about 0.08 of its total potential returns per unit of risk. Himalaya Shipping is currently generating about 0.12 per unit of volatility. If you would invest  483.00  in Himalaya Shipping on December 29, 2024 and sell it today you would earn a total of  101.00  from holding Himalaya Shipping or generate 20.91% return on investment over 90 days.

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

Eldorado Gold Corp  vs.  Himalaya Shipping

Eldorado Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eldorado Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Eldorado Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Himalaya Shipping

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Himalaya Shipping are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Himalaya Shipping reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eldorado Gold and Himalaya Shipping

The main advantage of trading using opposite Eldorado Gold and Himalaya Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold 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 Eldorado Gold Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.