Correlation Between Himalaya Shipping and Safe Bulkers

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

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

Diversification Opportunities for Himalaya Shipping and Safe Bulkers

0.81

Correlation Coefficient

Himalaya Shipping  Safe Bulkers

Very poor diversification

The 3 months correlation between Himalaya and Safe is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Himalaya Shipping and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers 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 Safe Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Bulkers has no effect on the direction of Himalaya Shipping i.e., Himalaya Shipping and Safe Bulkers go up and down completely randomly.

Pair Corralation between Himalaya Shipping and Safe Bulkers

Given the investment horizon of 90 days Himalaya Shipping is expected to generate 1.39 times more return on investment than Safe Bulkers. However, Himalaya Shipping is 1.39 times more volatile than Safe Bulkers. It trades about 0.13 of its potential returns per unit of risk. Safe Bulkers is currently generating about 0.08 per unit of risk. If you would invest  483.00  in Himalaya Shipping on December 28, 2024 and sell it today you would earn a total of  105.00  from holding Himalaya Shipping or generate 21.74% return on investment over 90 days.

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

Himalaya Shipping  vs.  Safe Bulkers

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

Safe Bulkers

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Safe Bulkers may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Himalaya Shipping and Safe Bulkers

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

The idea behind Himalaya Shipping and Safe Bulkers 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.