Correlation Between Matson and Himalaya Shipping

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

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

Diversification Opportunities for Matson and Himalaya Shipping

-0.5

Correlation Coefficient

Matson  Himalaya Shipping

Very good diversification

The 3 months correlation between Matson and Himalaya is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Matson Inc and Himalaya Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himalaya Shipping and Matson 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 Matson Inc 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 Matson i.e., Matson and Himalaya Shipping go up and down completely randomly.

Pair Corralation between Matson and Himalaya Shipping

Given the investment horizon of 90 days Matson Inc is expected to under-perform the Himalaya Shipping. But the stock apears to be less risky and, when comparing its historical volatility, Matson Inc is 1.71 times less risky than Himalaya Shipping. The stock trades about -0.05 of its potential returns per unit of risk. The Himalaya Shipping is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  483.00  in Himalaya Shipping on December 29, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Matson Inc  vs.  Himalaya Shipping

Matson Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matson Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Matson is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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

Pair Trading with Matson and Himalaya Shipping

The main advantage of trading using opposite Matson and Himalaya Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matson 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 Matson Inc 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.