Correlation Between Inpex Corp and Spectrum Technology

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

Diversification Opportunities for Inpex Corp and Spectrum Technology

0.11

Correlation Coefficient

Inpex Corp  Spectrum Technology

Average diversification

The 3 months correlation between Inpex and Spectrum is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Inpex Corp ADR and Spectrum Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Technology 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 Spectrum Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Technology has no effect on the direction of Inpex Corp i.e., Inpex Corp and Spectrum Technology go up and down completely randomly.

Pair Corralation between Inpex Corp and Spectrum Technology

If you would invest (100.00) in Spectrum Technology on September 3, 2024 and sell it today you would earn a total of  100.00  from holding Spectrum Technology or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Inpex Corp ADR  vs.  Spectrum Technology

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 latest fragile performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Spectrum Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spectrum Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Spectrum Technology is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Inpex Corp and Spectrum Technology

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

The idea behind Inpex Corp ADR and Spectrum Technology 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.