Correlation Between Saturn Oil and Inpex Corp

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

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

Diversification Opportunities for Saturn Oil and Inpex Corp

0.31

Correlation Coefficient

Saturn Oil  Inpex Corp

Weak diversification

The 3 months correlation between Saturn and Inpex is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Saturn Oil Gas and Inpex Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex Corp ADR and Saturn Oil 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 Saturn Oil Gas are associated (or correlated) with Inpex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex Corp ADR has no effect on the direction of Saturn Oil i.e., Saturn Oil and Inpex Corp go up and down completely randomly.

Pair Corralation between Saturn Oil and Inpex Corp

Assuming the 90 days horizon Saturn Oil Gas is expected to under-perform the Inpex Corp. In addition to that, Saturn Oil is 1.45 times more volatile than Inpex Corp ADR. It trades about -0.12 of its total potential returns per unit of risk. Inpex Corp ADR is currently generating about -0.02 per unit of volatility. If you would invest  1,347  in Inpex Corp ADR on December 5, 2024 and sell it today you would lose (67.00) from holding Inpex Corp ADR or give up 4.97% of portfolio value over 90 days.

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

Saturn Oil Gas  vs.  Inpex Corp ADR

Saturn Oil Gas

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Inpex Corp ADR

Risk-Adjusted Performance

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.

Pair Trading with Saturn Oil and Inpex Corp

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

The idea behind Saturn Oil Gas and Inpex Corp ADR 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.