Correlation Between Eco (Atlantic) and Inpex Corp

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

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

Diversification Opportunities for Eco (Atlantic) and Inpex Corp

-0.68

Correlation Coefficient

Eco (Atlantic)  Inpex Corp

Excellent diversification

The 3 months correlation between Eco and Inpex is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eco Oil Gas 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 Eco (Atlantic) 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 Eco Oil Gas 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 Eco (Atlantic) i.e., Eco (Atlantic) and Inpex Corp go up and down completely randomly.

Pair Corralation between Eco (Atlantic) and Inpex Corp

Assuming the 90 days horizon Eco (Atlantic) is expected to generate 3.95 times less return on investment than Inpex Corp. In addition to that, Eco (Atlantic) is 5.19 times more volatile than Inpex Corp ADR. It trades about 0.01 of its total potential returns per unit of risk. Inpex Corp ADR is currently generating about 0.12 per unit of volatility. If you would invest  1,264  in Inpex Corp ADR on December 27, 2024 and sell it today you would earn a total of  150.00  from holding Inpex Corp ADR or generate 11.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Eco Oil Gas  vs.  Inpex Corp ADR

Eco (Atlantic)

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eco Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eco (Atlantic) is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Inpex Corp ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inpex Corp ADR are ranked lower than 9 (%) 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 Eco (Atlantic) and Inpex Corp

The main advantage of trading using opposite Eco (Atlantic) and Inpex Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco (Atlantic) 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 Eco Oil Gas 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.