Correlation Between Himalaya Shipping and Oceanpal

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

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

Diversification Opportunities for Himalaya Shipping and Oceanpal

0.59

Correlation Coefficient

Himalaya Shipping  Oceanpal

Very weak diversification

The 3 months correlation between Himalaya and Oceanpal is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Himalaya Shipping and Oceanpal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanpal 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 Oceanpal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanpal has no effect on the direction of Himalaya Shipping i.e., Himalaya Shipping and Oceanpal go up and down completely randomly.

Pair Corralation between Himalaya Shipping and Oceanpal

Given the investment horizon of 90 days Himalaya Shipping is expected to generate 3.11 times less return on investment than Oceanpal. But when comparing it to its historical volatility, Himalaya Shipping is 1.47 times less risky than Oceanpal. It trades about 0.09 of its potential returns per unit of risk. Oceanpal is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  109.00  in Oceanpal on October 24, 2024 and sell it today you would earn a total of  13.00  from holding Oceanpal or generate 11.93% return on investment over 90 days.

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

Himalaya Shipping  vs.  Oceanpal

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 fragile performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Oceanpal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oceanpal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Himalaya Shipping and Oceanpal

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

The idea behind Himalaya Shipping and Oceanpal 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.