Correlation Between CF Industries and Himalaya Shipping
Can any of the company-specific risk be diversified away by investing in both CF Industries 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 CF Industries and Himalaya Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Industries Holdings and Himalaya Shipping, you can compare the effects of market volatilities on CF Industries 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 CF Industries with a short position of Himalaya Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Himalaya Shipping.
Diversification Opportunities for CF Industries and Himalaya Shipping
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CF Industries and Himalaya is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Himalaya Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himalaya Shipping and CF Industries 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 CF Industries Holdings 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 CF Industries i.e., CF Industries and Himalaya Shipping go up and down completely randomly.
Pair Corralation between CF Industries and Himalaya Shipping
Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 0.69 times more return on investment than Himalaya Shipping. However, CF Industries Holdings is 1.45 times less risky than Himalaya Shipping. It trades about 0.06 of its potential returns per unit of risk. Himalaya Shipping is currently generating about -0.04 per unit of risk. If you would invest 7,445 in CF Industries Holdings on November 3, 2024 and sell it today you would earn a total of 1,776 from holding CF Industries Holdings or generate 23.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Industries Holdings vs. Himalaya Shipping
Performance |
| Timeline |
| CF Industries Holdings |
| Himalaya Shipping |
CF Industries and Himalaya Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Himalaya Shipping
The main advantage of trading using opposite CF Industries and Himalaya Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries 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.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| Himalaya Shipping vs. Volaris | Himalaya Shipping vs. Village Super Market | Himalaya Shipping vs. Albertsons Companies | Himalaya Shipping vs. Astral Foods Limited |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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