Correlation Between Invictus Energy and 88 Energy

Can any of the company-specific risk be diversified away by investing in both Invictus Energy and 88 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 Invictus Energy and 88 Energy 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 88 Energy Limited, you can compare the effects of market volatilities on Invictus Energy and 88 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 Invictus Energy with a short position of 88 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invictus Energy and 88 Energy.

Diversification Opportunities for Invictus Energy and 88 Energy

0.38

Correlation Coefficient

Invictus Energy  88 Energy

Weak diversification

The 3 months correlation between Invictus and EEENF is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Invictus Energy Limited and 88 Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy Limited 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 88 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88 Energy Limited has no effect on the direction of Invictus Energy i.e., Invictus Energy and 88 Energy go up and down completely randomly.

Pair Corralation between Invictus Energy and 88 Energy

Assuming the 90 days horizon Invictus Energy Limited is expected to under-perform the 88 Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Invictus Energy Limited is 1.03 times less risky than 88 Energy. The otc stock trades about -0.03 of its potential returns per unit of risk. The 88 Energy Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  0.14  in 88 Energy Limited on September 18, 2024 and sell it today you would lose (0.02) from holding 88 Energy Limited or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Invictus Energy Limited  vs.  88 Energy Limited

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.

88 Energy Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 88 Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, 88 Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Invictus Energy and 88 Energy

The main advantage of trading using opposite Invictus Energy and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invictus Energy position performs unexpectedly, 88 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 88 Energy will offset losses from the drop in 88 Energy's long position.

The idea behind Invictus Energy Limited and 88 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.