Correlation Between Himalaya Shipping and Knight Transportation

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

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

Diversification Opportunities for Himalaya Shipping and Knight Transportation

0.4

Correlation Coefficient

Himalaya Shipping  Knight Transportation

Very weak diversification

The 3 months correlation between Himalaya and Knight is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Himalaya Shipping and Knight Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Transportation 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 Knight Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Transportation has no effect on the direction of Himalaya Shipping i.e., Himalaya Shipping and Knight Transportation go up and down completely randomly.

Pair Corralation between Himalaya Shipping and Knight Transportation

Given the investment horizon of 90 days Himalaya Shipping is expected to generate 1.03 times more return on investment than Knight Transportation. However, Himalaya Shipping is 1.03 times more volatile than Knight Transportation. It trades about 0.21 of its potential returns per unit of risk. Knight Transportation is currently generating about 0.04 per unit of risk. If you would invest  524.00  in Himalaya Shipping on May 6, 2025 and sell it today you would earn a total of  165.00  from holding Himalaya Shipping or generate 31.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Himalaya Shipping  vs.  Knight Transportation

Himalaya Shipping

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Himalaya Shipping are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical indicators, Himalaya Shipping reported solid returns over the last few months and may actually be approaching a breakup point.

Knight Transportation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Knight Transportation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Knight Transportation is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Himalaya Shipping and Knight Transportation

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

The idea behind Himalaya Shipping and Knight Transportation 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.