Correlation Between InPlay Oil and INSURANCE AUST

Can any of the company-specific risk be diversified away by investing in both InPlay Oil and INSURANCE AUST 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 INSURANCE AUST 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 INSURANCE AUST GRP, you can compare the effects of market volatilities on InPlay Oil and INSURANCE AUST 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 INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and INSURANCE AUST.

Diversification Opportunities for InPlay Oil and INSURANCE AUST

-0.74

Correlation Coefficient

InPlay Oil  INSURANCE AUST

Pay attention - limited upside

The 3 months correlation between InPlay and INSURANCE is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP 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 INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of InPlay Oil i.e., InPlay Oil and INSURANCE AUST go up and down completely randomly.

Pair Corralation between InPlay Oil and INSURANCE AUST

Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the INSURANCE AUST. In addition to that, InPlay Oil is 1.29 times more volatile than INSURANCE AUST GRP. It trades about -0.04 of its total potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.08 per unit of volatility. If you would invest  275.00  in INSURANCE AUST GRP on October 5, 2024 and sell it today you would earn a total of  225.00  from holding INSURANCE AUST GRP or generate 81.82% return on investment over 90 days.

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

InPlay Oil Corp  vs.  INSURANCE AUST GRP

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

INSURANCE AUST GRP

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days INSURANCE AUST GRP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile primary indicators, INSURANCE AUST may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with InPlay Oil and INSURANCE AUST

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

The idea behind InPlay Oil Corp and INSURANCE AUST GRP 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.