Correlation Between Inpex Corp and Valeura Energy

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

Diversification Opportunities for Inpex Corp and Valeura Energy

0.26

Correlation Coefficient

Inpex Corp  Valeura Energy

Modest diversification

The 3 months correlation between Inpex and Valeura is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Inpex Corp ADR and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura 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 Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Inpex Corp i.e., Inpex Corp and Valeura Energy go up and down completely randomly.

Pair Corralation between Inpex Corp and Valeura Energy

Assuming the 90 days horizon Inpex Corp is expected to generate 2.17 times less return on investment than Valeura Energy. But when comparing it to its historical volatility, Inpex Corp ADR is 1.88 times less risky than Valeura Energy. It trades about 0.11 of its potential returns per unit of risk. Valeura Energy is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  476.00  in Valeura Energy on December 28, 2024 and sell it today you would earn a total of  114.00  from holding Valeura Energy or generate 23.95% return on investment over 90 days.

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

Inpex Corp ADR  vs.  Valeura Energy

Inpex Corp ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inpex Corp ADR are ranked lower than 8 (%) 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.

Valeura Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Valeura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inpex Corp and Valeura Energy

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

The idea behind Inpex Corp ADR and Valeura 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.