Correlation Between Himalaya Shipping and Euroseas

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

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

Diversification Opportunities for Himalaya Shipping and Euroseas

-0.33

Correlation Coefficient

Himalaya Shipping  Euroseas

Very good diversification

The 3 months correlation between Himalaya and Euroseas is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Himalaya Shipping and Euroseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euroseas 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 Euroseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euroseas has no effect on the direction of Himalaya Shipping i.e., Himalaya Shipping and Euroseas go up and down completely randomly.

Pair Corralation between Himalaya Shipping and Euroseas

Given the investment horizon of 90 days Himalaya Shipping is expected to generate 0.78 times more return on investment than Euroseas. However, Himalaya Shipping is 1.28 times less risky than Euroseas. It trades about 0.12 of its potential returns per unit of risk. Euroseas is currently generating about -0.02 per unit of risk. 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

Himalaya Shipping  vs.  Euroseas

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.

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.

Pair Trading with Himalaya Shipping and Euroseas

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

The idea behind Himalaya Shipping and Euroseas 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.