Correlation Between InPlay Oil and TINC Comm

Can any of the company-specific risk be diversified away by investing in both InPlay Oil and TINC Comm 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 InPlay Oil and TINC Comm into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between InPlay Oil Corp and TINC Comm VA, you can compare the effects of market volatilities on InPlay Oil and TINC Comm 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 InPlay Oil with a short position of TINC Comm. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and TINC Comm.

Diversification Opportunities for InPlay Oil and TINC Comm

0.7

Correlation Coefficient

InPlay Oil  TINC Comm

Poor diversification

The 3 months correlation between InPlay and TINC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and TINC Comm VA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TINC Comm VA and InPlay Oil 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 InPlay Oil Corp are associated (or correlated) with TINC Comm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TINC Comm VA has no effect on the direction of InPlay Oil i.e., InPlay Oil and TINC Comm go up and down completely randomly.

Pair Corralation between InPlay Oil and TINC Comm

Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the TINC Comm. In addition to that, InPlay Oil is 2.17 times more volatile than TINC Comm VA. It trades about -0.02 of its total potential returns per unit of risk. TINC Comm VA is currently generating about -0.01 per unit of volatility. If you would invest  1,158  in TINC Comm VA on October 15, 2024 and sell it today you would lose (88.00) from holding TINC Comm VA or give up 7.6% of portfolio value over 90 days.

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

InPlay Oil Corp  vs.  TINC Comm VA

InPlay Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, InPlay Oil is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

TINC Comm VA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TINC Comm VA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with InPlay Oil and TINC Comm

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

The idea behind InPlay Oil Corp and TINC Comm VA 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.