Correlation Between Inpex and Energean Plc

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

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

Diversification Opportunities for Inpex and Energean Plc

-0.34

Correlation Coefficient

Inpex  Energean Plc

Very good diversification

The 3 months correlation between Inpex and Energean is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Inpex and Energean plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energean plc and Inpex 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 Inpex are associated (or correlated) with Energean Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energean plc has no effect on the direction of Inpex i.e., Inpex and Energean Plc go up and down completely randomly.

Pair Corralation between Inpex and Energean Plc

Assuming the 90 days horizon Inpex is expected to under-perform the Energean Plc. In addition to that, Inpex is 1.23 times more volatile than Energean plc. It trades about -0.04 of its total potential returns per unit of risk. Energean plc is currently generating about 0.05 per unit of volatility. If you would invest  1,355  in Energean plc on September 29, 2024 and sell it today you would earn a total of  40.00  from holding Energean plc or generate 2.95% return on investment over 90 days.

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

Inpex  vs.  Energean plc

Inpex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inpex 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 technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Energean plc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Energean plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Energean Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Inpex and Energean Plc

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

The idea behind Inpex and Energean plc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.