Correlation Between Euroseas and Himalaya Shipping

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

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

Diversification Opportunities for Euroseas and Himalaya Shipping

-0.33

Correlation Coefficient

Euroseas  Himalaya Shipping

Very good diversification

The 3 months correlation between Euroseas and Himalaya is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Euroseas and Himalaya Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himalaya Shipping and Euroseas 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 Euroseas 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 Euroseas i.e., Euroseas and Himalaya Shipping go up and down completely randomly.

Pair Corralation between Euroseas and Himalaya Shipping

Given the investment horizon of 90 days Euroseas is expected to under-perform the Himalaya Shipping. In addition to that, Euroseas is 1.28 times more volatile than Himalaya Shipping. It trades about -0.02 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 30, 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Euroseas  vs.  Himalaya Shipping

Euroseas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Euroseas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Euroseas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 unsteady technical indicators, Himalaya Shipping reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Euroseas and Himalaya Shipping

The main advantage of trading using opposite Euroseas and Himalaya Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euroseas 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 Euroseas 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.