Correlation Between Invictus Energy and Reconnaissance Energy

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

Diversification Opportunities for Invictus Energy and Reconnaissance Energy

0.83

Correlation Coefficient

Invictus Energy  Reconnaissance Energy

Very poor diversification

The 3 months correlation between Invictus and Reconnaissance is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Invictus Energy Limited and Reconnaissance Energy Africa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reconnaissance Energy 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 Reconnaissance Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reconnaissance Energy has no effect on the direction of Invictus Energy i.e., Invictus Energy and Reconnaissance Energy go up and down completely randomly.

Pair Corralation between Invictus Energy and Reconnaissance Energy

Assuming the 90 days horizon Invictus Energy Limited is expected to generate 2.77 times more return on investment than Reconnaissance Energy. However, Invictus Energy is 2.77 times more volatile than Reconnaissance Energy Africa. It trades about 0.19 of its potential returns per unit of risk. Reconnaissance Energy Africa is currently generating about 0.08 per unit of risk. If you would invest  4.02  in Invictus Energy Limited on June 28, 2025 and sell it today you would earn a total of  7.98  from holding Invictus Energy Limited or generate 198.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Invictus Energy Limited  vs.  Reconnaissance Energy Africa

Invictus Energy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invictus Energy Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Invictus Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Reconnaissance Energy

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Reconnaissance Energy Africa are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Reconnaissance Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invictus Energy and Reconnaissance Energy

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

The idea behind Invictus Energy Limited and Reconnaissance Energy Africa 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.