Correlation Between Santos and Inpex

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Can any of the company-specific risk be diversified away by investing in both Santos and Inpex 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 Santos and Inpex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santos Ltd ADR and Inpex, you can compare the effects of market volatilities on Santos and Inpex 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 Santos with a short position of Inpex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santos and Inpex.

Diversification Opportunities for Santos and Inpex

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Santos and Inpex is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Santos Ltd ADR and Inpex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex and Santos 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 Santos Ltd ADR are associated (or correlated) with Inpex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex has no effect on the direction of Santos i.e., Santos and Inpex go up and down completely randomly.

Pair Corralation between Santos and Inpex

If you would invest  538.00  in Santos Ltd ADR on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Santos Ltd ADR or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy5.0%
ValuesDaily Returns

Santos Ltd ADR  vs.  Inpex

 Performance 
       Timeline  
Santos Ltd ADR 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Inpex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical 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.

Santos and Inpex Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Santos and Inpex

The main advantage of trading using opposite Santos and Inpex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santos position performs unexpectedly, Inpex 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 will offset losses from the drop in Inpex's long position.
The idea behind Santos Ltd ADR and Inpex 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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