Correlation Between Invictus Energy and Obayashi

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

Diversification Opportunities for Invictus Energy and Obayashi

-0.62

Correlation Coefficient

Invictus Energy  Obayashi

Excellent diversification

The 3 months correlation between Invictus and Obayashi is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Invictus Energy Limited and Obayashi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obayashi 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 Obayashi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obayashi has no effect on the direction of Invictus Energy i.e., Invictus Energy and Obayashi go up and down completely randomly.

Pair Corralation between Invictus Energy and Obayashi

Assuming the 90 days horizon Invictus Energy Limited is expected to under-perform the Obayashi. In addition to that, Invictus Energy is 4.05 times more volatile than Obayashi. It trades about -0.05 of its total potential returns per unit of risk. Obayashi is currently generating about 0.03 per unit of volatility. If you would invest  1,309  in Obayashi on September 23, 2024 and sell it today you would earn a total of  11.00  from holding Obayashi or generate 0.84% return on investment over 90 days.

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

Invictus Energy Limited  vs.  Obayashi

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 unsteady performance in the last few months, the Stock's basic 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.

Obayashi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Obayashi are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Obayashi reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invictus Energy and Obayashi

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

The idea behind Invictus Energy Limited and Obayashi 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.