Correlation Between Battalion Oil and Inpex Corp

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

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

Diversification Opportunities for Battalion Oil and Inpex Corp

-0.78

Correlation Coefficient

Battalion Oil  Inpex Corp

Pay attention - limited upside

The 3 months correlation between Battalion and Inpex is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Battalion Oil Corp and Inpex Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex Corp ADR and Battalion 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 Battalion Oil Corp are associated (or correlated) with Inpex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex Corp ADR has no effect on the direction of Battalion Oil i.e., Battalion Oil and Inpex Corp go up and down completely randomly.

Pair Corralation between Battalion Oil and Inpex Corp

Given the investment horizon of 90 days Battalion Oil Corp is expected to under-perform the Inpex Corp. In addition to that, Battalion Oil is 3.55 times more volatile than Inpex Corp ADR. It trades about -0.08 of its total potential returns per unit of risk. Inpex Corp ADR is currently generating about 0.09 per unit of volatility. If you would invest  1,275  in Inpex Corp ADR on December 29, 2024 and sell it today you would earn a total of  114.00  from holding Inpex Corp ADR or generate 8.94% return on investment over 90 days.

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

Battalion Oil Corp  vs.  Inpex Corp ADR

Battalion Oil Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Battalion Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Inpex Corp ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inpex Corp ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical indicators, Inpex Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Battalion Oil and Inpex Corp

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

The idea behind Battalion Oil Corp and Inpex Corp ADR 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.