Correlation Between Castor Maritime and Himalaya Shipping

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

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

Diversification Opportunities for Castor Maritime and Himalaya Shipping

0.67

Correlation Coefficient

Castor Maritime  Himalaya Shipping

Poor diversification

The 3 months correlation between Castor and Himalaya is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Castor Maritime and Himalaya Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himalaya Shipping and Castor Maritime 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 Castor Maritime 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 Castor Maritime i.e., Castor Maritime and Himalaya Shipping go up and down completely randomly.

Pair Corralation between Castor Maritime and Himalaya Shipping

Given the investment horizon of 90 days Castor Maritime is expected to generate 1.09 times less return on investment than Himalaya Shipping. In addition to that, Castor Maritime is 1.78 times more volatile than Himalaya Shipping. It trades about 0.01 of its total potential returns per unit of risk. Himalaya Shipping is currently generating about 0.02 per unit of volatility. If you would invest  466.00  in Himalaya Shipping on September 14, 2024 and sell it today you would earn a total of  55.00  from holding Himalaya Shipping or generate 11.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	87.04%
Values	Daily Returns

Castor Maritime  vs.  Himalaya Shipping

Castor Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castor Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Castor Maritime and Himalaya Shipping

The main advantage of trading using opposite Castor Maritime and Himalaya Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castor Maritime 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 Castor Maritime 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.