Correlation Between MMEX Resources and Invictus Energy

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

By analyzing existing cross correlation between MMEX Resources Corp and Invictus Energy Limited, you can compare the effects of market volatilities on MMEX Resources and Invictus 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 MMEX Resources with a short position of Invictus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of MMEX Resources and Invictus Energy.

Diversification Opportunities for MMEX Resources and Invictus Energy

0.2

Correlation Coefficient

MMEX Resources  Invictus Energy

Modest diversification

The 3 months correlation between MMEX and Invictus is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding MMEX Resources Corp and Invictus Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invictus Energy and MMEX Resources 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 MMEX Resources Corp are associated (or correlated) with Invictus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invictus Energy has no effect on the direction of MMEX Resources i.e., MMEX Resources and Invictus Energy go up and down completely randomly.

Pair Corralation between MMEX Resources and Invictus Energy

Given the investment horizon of 90 days MMEX Resources Corp is expected to generate 38.05 times more return on investment than Invictus Energy. However, MMEX Resources is 38.05 times more volatile than Invictus Energy Limited. It trades about 0.28 of its potential returns per unit of risk. Invictus Energy Limited is currently generating about 0.01 per unit of risk. If you would invest  0.01  in MMEX Resources Corp on September 18, 2024 and sell it today you would earn a total of  0.00  from holding MMEX Resources Corp or generate 0.0% return on investment over 90 days.

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

MMEX Resources Corp  vs.  Invictus Energy Limited

MMEX Resources Corp

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MMEX Resources Corp are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, MMEX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Invictus Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invictus Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with MMEX Resources and Invictus Energy

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

The idea behind MMEX Resources Corp and Invictus Energy Limited 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.