Correlation Between Invictus Energy and Altex Industries

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

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

Diversification Opportunities for Invictus Energy and Altex Industries

-0.2

Correlation Coefficient

Invictus Energy  Altex Industries

Good diversification

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

Pair Corralation between Invictus Energy and Altex Industries

Assuming the 90 days horizon Invictus Energy Limited is expected to generate 1.21 times more return on investment than Altex Industries. However, Invictus Energy is 1.21 times more volatile than Altex Industries. It trades about 0.07 of its potential returns per unit of risk. Altex Industries is currently generating about 0.03 per unit of risk. If you would invest  4.20  in Invictus Energy Limited on September 26, 2024 and sell it today you would earn a total of  0.30  from holding Invictus Energy Limited or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Invictus Energy Limited  vs.  Altex Industries

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 nearly stable basic indicators, Invictus Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Altex Industries

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altex Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Altex Industries showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invictus Energy and Altex Industries

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

The idea behind Invictus Energy Limited and Altex Industries 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.