Correlation Between Inpex Corp and Coelacanth Energy

Can any of the company-specific risk be diversified away by investing in both Inpex Corp and Coelacanth 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 Inpex Corp and Coelacanth Energy 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 Coelacanth Energy, you can compare the effects of market volatilities on Inpex Corp and Coelacanth 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 Inpex Corp with a short position of Coelacanth Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inpex Corp and Coelacanth Energy.

Diversification Opportunities for Inpex Corp and Coelacanth Energy

-0.12

Correlation Coefficient

Inpex Corp  Coelacanth Energy

Good diversification

The 3 months correlation between Inpex and Coelacanth is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Inpex Corp ADR and Coelacanth Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coelacanth Energy 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 Coelacanth Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coelacanth Energy has no effect on the direction of Inpex Corp i.e., Inpex Corp and Coelacanth Energy go up and down completely randomly.

Pair Corralation between Inpex Corp and Coelacanth Energy

Assuming the 90 days horizon Inpex Corp ADR is expected to under-perform the Coelacanth Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Inpex Corp ADR is 1.94 times less risky than Coelacanth Energy. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Coelacanth Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Coelacanth Energy on October 23, 2024 and sell it today you would earn a total of  2.00  from holding Coelacanth Energy or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Inpex Corp ADR  vs.  Coelacanth Energy

Inpex Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inpex Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Inpex Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Coelacanth Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coelacanth Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Coelacanth Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Inpex Corp and Coelacanth Energy

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

The idea behind Inpex Corp ADR and Coelacanth Energy 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 Global Correlations module to find global opportunities by holding instruments from different markets.