Correlation Between Hemisphere Energy and InPlay Oil

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

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

Diversification Opportunities for Hemisphere Energy and InPlay Oil

0.9

Correlation Coefficient

Hemisphere Energy  InPlay Oil

Almost no diversification

The 3 months correlation between Hemisphere and InPlay is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp and Hemisphere 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 Hemisphere Energy are associated (or correlated) with InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Hemisphere Energy i.e., Hemisphere Energy and InPlay Oil go up and down completely randomly.

Pair Corralation between Hemisphere Energy and InPlay Oil

Assuming the 90 days horizon Hemisphere Energy is expected to generate 2.43 times less return on investment than InPlay Oil. But when comparing it to its historical volatility, Hemisphere Energy is 1.99 times less risky than InPlay Oil. It trades about 0.16 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  722.00  in InPlay Oil Corp on April 20, 2025 and sell it today you would earn a total of  290.00  from holding InPlay Oil Corp or generate 40.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Hemisphere Energy  vs.  InPlay Oil Corp

Hemisphere Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hemisphere Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Hemisphere Energy showed solid returns over the last few months and may actually be approaching a breakup point.

InPlay Oil Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in InPlay Oil Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, InPlay Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hemisphere Energy and InPlay Oil

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

The idea behind Hemisphere Energy and InPlay Oil Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.