Correlation Between Himalaya Shipping and Global Ship

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

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

Diversification Opportunities for Himalaya Shipping and Global Ship

0.8

Correlation Coefficient

Himalaya Shipping  Global Ship

Very poor diversification

The 3 months correlation between Himalaya and Global is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Himalaya Shipping and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Himalaya Shipping i.e., Himalaya Shipping and Global Ship go up and down completely randomly.

Pair Corralation between Himalaya Shipping and Global Ship

Given the investment horizon of 90 days Himalaya Shipping is expected to under-perform the Global Ship. In addition to that, Himalaya Shipping is 1.62 times more volatile than Global Ship Lease. It trades about -0.13 of its total potential returns per unit of risk. Global Ship Lease is currently generating about -0.05 per unit of volatility. If you would invest  2,342  in Global Ship Lease on September 4, 2024 and sell it today you would lose (147.00) from holding Global Ship Lease or give up 6.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Himalaya Shipping  vs.  Global Ship Lease

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 conflicting 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.

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Global Ship is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Himalaya Shipping and Global Ship

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

The idea behind Himalaya Shipping and Global Ship Lease 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.