Correlation Between Nordic American and Himalaya Shipping
Can any of the company-specific risk be diversified away by investing in both Nordic American 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 Nordic American and Himalaya Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic American Tankers and Himalaya Shipping, you can compare the effects of market volatilities on Nordic American 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 Nordic American with a short position of Himalaya Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic American and Himalaya Shipping.
Diversification Opportunities for Nordic American and Himalaya Shipping
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nordic and Himalaya is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nordic American Tankers and Himalaya Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himalaya Shipping and Nordic American 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 Nordic American Tankers 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 Nordic American i.e., Nordic American and Himalaya Shipping go up and down completely randomly.
Pair Corralation between Nordic American and Himalaya Shipping
Considering the 90-day investment horizon Nordic American Tankers is expected to under-perform the Himalaya Shipping. In addition to that, Nordic American is 1.02 times more volatile than Himalaya Shipping. It trades about -0.27 of its total potential returns per unit of risk. Himalaya Shipping is currently generating about 0.2 per unit of volatility. If you would invest 639.00 in Himalaya Shipping on August 27, 2024 and sell it today you would earn a total of 53.00 from holding Himalaya Shipping or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic American Tankers vs. Himalaya Shipping
Performance |
| Timeline |
| Nordic American Tankers |
| Himalaya Shipping |
Nordic American and Himalaya Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic American and Himalaya Shipping
The main advantage of trading using opposite Nordic American and Himalaya Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic American 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.| Nordic American vs. Genco Shipping Trading | Nordic American vs. Golden Ocean Group | Nordic American vs. Star Bulk Carriers | Nordic American vs. Oceanpal |
| Himalaya Shipping vs. Solstad Offshore ASA | Himalaya Shipping vs. MYR Group | Himalaya Shipping vs. Chester Mining | Himalaya Shipping vs. Park Ohio Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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