Correlation Between Inpex Corp and Battalion Oil

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

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

Diversification Opportunities for Inpex Corp and Battalion Oil

-0.78

Correlation Coefficient

Inpex Corp  Battalion Oil

Pay attention - limited upside

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

Pair Corralation between Inpex Corp and Battalion Oil

Assuming the 90 days horizon Inpex Corp ADR is expected to generate 0.28 times more return on investment than Battalion Oil. However, Inpex Corp ADR is 3.55 times less risky than Battalion Oil. It trades about 0.09 of its potential returns per unit of risk. Battalion Oil Corp is currently generating about -0.08 per unit of risk. 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

Inpex Corp ADR  vs.  Battalion Oil Corp

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.

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.

Pair Trading with Inpex Corp and Battalion Oil

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

The idea behind Inpex Corp ADR and Battalion Oil Corp 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..