Correlation Between Kirby and Himalaya Shipping

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

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

Diversification Opportunities for Kirby and Himalaya Shipping

0.81

Correlation Coefficient

Kirby  Himalaya Shipping

Very poor diversification

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

Pair Corralation between Kirby and Himalaya Shipping

Considering the 90-day investment horizon Kirby is expected to under-perform the Himalaya Shipping. But the stock apears to be less risky and, when comparing its historical volatility, Kirby is 1.8 times less risky than Himalaya Shipping. The stock trades about -0.17 of its potential returns per unit of risk. The Himalaya Shipping is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  554.00  in Himalaya Shipping on December 1, 2024 and sell it today you would lose (9.00) from holding Himalaya Shipping or give up 1.62% of portfolio value over 90 days.

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

Kirby  vs.  Himalaya Shipping

Kirby

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kirby has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Himalaya Shipping

Risk-Adjusted Performance

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 relatively invariable technical indicators, Himalaya Shipping is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kirby and Himalaya Shipping

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

The idea behind Kirby and Himalaya Shipping 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.