Context. The smoothed particle hydrodynamics (SPH) technique is a well-known numerical method that has been applied to simulate the evolution of a wide variety of systems. Modern astrophysical applications of the method rely on the Lagrangian formulation of fluid Euler equations, which is fully conservative. A different scheme, based on a matrix approach to the SPH equations is currently being used in computational fluid dynamics. These matrix formulations achieve better interpolations of the physical magnitudes but they are, in general, not fully conservative. The matrix approach to the Euler equations has never been used in astrophysics. Aims. We develop and test a fully conservative SPH scheme based on a tensor formulation that can be applied to simulate astrophysical systems. Methods. In the proposed scheme, derivatives are calculated from an integral expression that leads to a tensor (instead of a vectorial) estimation of gradients and reduces to the standard formulation in the continuum limit. The new formulation improves the interpolation of physical magnitudes, leading to a set of conservative equations that resembles those of standard SPH. The resulting scheme is verified using a variety of well-known tests, all of them simulated in two dimensions. We also discuss an application of the proposed tensor method to astrophysics by simulating the stability of a Sun-like polytrope calculated in three dimensions. Results. The proposed scheme is able to improve the results of standard SPH in the two-dimensional tests, especially in the simulation of subsonic hydrodynamic instabilities. Our results for the stability of the Sun-like polytrope suggest that the new method can be used in astrophysics to carry out three-dimensional calculations with a computational cost that is only slightly higher (i.e. ≤50% for a serial code) than that of a standard SPH formulation. Conclusions. A formalism based on a matrix approach to Euler SPH equations was developed and checked. The new scheme is more accurate because of the re-normalization imposed on the interpolations, which is fully conservative and probably less prone to undergo the tensile instability. The analysis of several test cases suggest that the method may improve the simulation of both subsonic and supersonic systems. An application of the tensor method to astrophysics is, for the first time, successfully carried out. These encouraging results indicates that more work should be invested in the applications of matrix SPH formulations to astrophysics.