Correlation Between Inpex Corp and Saturn Oil

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

Diversification Opportunities for Inpex Corp and Saturn Oil

0.72

Correlation Coefficient

Inpex Corp  Saturn Oil

Poor diversification

The 3 months correlation between Inpex and Saturn is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Inpex Corp ADR and Saturn Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saturn Oil Gas 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 Saturn Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saturn Oil Gas has no effect on the direction of Inpex Corp i.e., Inpex Corp and Saturn Oil go up and down completely randomly.

Pair Corralation between Inpex Corp and Saturn Oil

Assuming the 90 days horizon Inpex Corp ADR is expected to generate 0.82 times more return on investment than Saturn Oil. However, Inpex Corp ADR is 1.22 times less risky than Saturn Oil. It trades about -0.04 of its potential returns per unit of risk. Saturn Oil Gas is currently generating about -0.14 per unit of risk. If you would invest  1,326  in Inpex Corp ADR on September 18, 2024 and sell it today you would lose (64.00) from holding Inpex Corp ADR or give up 4.83% of portfolio value over 90 days.

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

Inpex Corp ADR  vs.  Saturn Oil Gas

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Saturn Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saturn Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic 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.

Pair Trading with Inpex Corp and Saturn Oil

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

The idea behind Inpex Corp ADR and Saturn Oil Gas 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..