Correlation Between Himalaya Shipping and Costamare

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

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

Diversification Opportunities for Himalaya Shipping and Costamare

0.75

Correlation Coefficient

Himalaya Shipping  Costamare

Poor diversification

The 3 months correlation between Himalaya and Costamare is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Himalaya Shipping and Costamare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costamare 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 Costamare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costamare has no effect on the direction of Himalaya Shipping i.e., Himalaya Shipping and Costamare go up and down completely randomly.

Pair Corralation between Himalaya Shipping and Costamare

Given the investment horizon of 90 days Himalaya Shipping is expected to under-perform the Costamare. In addition to that, Himalaya Shipping is 1.16 times more volatile than Costamare. It trades about -0.08 of its total potential returns per unit of risk. Costamare is currently generating about 0.01 per unit of volatility. If you would invest  1,329  in Costamare on September 2, 2024 and sell it today you would lose (9.00) from holding Costamare or give up 0.68% of portfolio value over 90 days.

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

Himalaya Shipping  vs.  Costamare

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 conflicting 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.

Costamare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Costamare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Costamare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Himalaya Shipping and Costamare

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

The idea behind Himalaya Shipping and Costamare 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.