Correlation Between Eco (Atlantic) and Invictus Energy

Can any of the company-specific risk be diversified away by investing in both Eco (Atlantic) and Invictus Energy 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 Invictus Energy 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 Invictus Energy Limited, you can compare the effects of market volatilities on Eco (Atlantic) and Invictus Energy 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 Invictus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco (Atlantic) and Invictus Energy.

Diversification Opportunities for Eco (Atlantic) and Invictus Energy

-0.21

Correlation Coefficient

Eco (Atlantic)  Invictus Energy

Very good diversification

The 3 months correlation between Eco and Invictus is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Eco Oil Gas and Invictus Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invictus Energy 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 Invictus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invictus Energy has no effect on the direction of Eco (Atlantic) i.e., Eco (Atlantic) and Invictus Energy go up and down completely randomly.

Pair Corralation between Eco (Atlantic) and Invictus Energy

Assuming the 90 days horizon Eco (Atlantic) is expected to generate 1.11 times less return on investment than Invictus Energy. In addition to that, Eco (Atlantic) is 1.0 times more volatile than Invictus Energy Limited. It trades about 0.04 of its total potential returns per unit of risk. Invictus Energy Limited is currently generating about 0.05 per unit of volatility. If you would invest  4.70  in Invictus Energy Limited on November 29, 2024 and sell it today you would earn a total of  0.10  from holding Invictus Energy Limited or generate 2.13% return on investment over 90 days.

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

Eco Oil Gas  vs.  Invictus Energy Limited

Eco (Atlantic)

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Oil Gas are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Eco (Atlantic) reported solid returns over the last few months and may actually be approaching a breakup point.

Invictus Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invictus Energy Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Invictus Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eco (Atlantic) and Invictus Energy

The main advantage of trading using opposite Eco (Atlantic) and Invictus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco (Atlantic) position performs unexpectedly, Invictus Energy 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 Invictus Energy will offset losses from the drop in Invictus Energy's long position.

The idea behind Eco Oil Gas and Invictus Energy Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.