Correlation Between Himalaya Shipping and Citizens

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

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

Diversification Opportunities for Himalaya Shipping and Citizens

0.12

Correlation Coefficient

Himalaya Shipping  Citizens

Average diversification

The 3 months correlation between Himalaya and Citizens is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Himalaya Shipping and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens and Himalaya Shipping 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 Himalaya Shipping are associated (or correlated) with Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of Himalaya Shipping i.e., Himalaya Shipping and Citizens go up and down completely randomly.

Pair Corralation between Himalaya Shipping and Citizens

Given the investment horizon of 90 days Himalaya Shipping is expected to generate 0.8 times more return on investment than Citizens. However, Himalaya Shipping is 1.25 times less risky than Citizens. It trades about 0.12 of its potential returns per unit of risk. Citizens is currently generating about 0.09 per unit of risk. 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

Himalaya Shipping  vs.  Citizens

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.

Citizens

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens are ranked lower than 6 (%) 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.

Pair Trading with Himalaya Shipping and Citizens

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

The idea behind Himalaya Shipping and Citizens 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.