Correlation Between PHX Minerals and Indonesia Energy

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

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

Diversification Opportunities for PHX Minerals and Indonesia Energy

0.52

Correlation Coefficient

PHX Minerals  Indonesia Energy

Very weak diversification

The 3 months correlation between PHX and Indonesia is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PHX Minerals and Indonesia Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indonesia Energy and PHX Minerals 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 PHX Minerals are associated (or correlated) with Indonesia Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indonesia Energy has no effect on the direction of PHX Minerals i.e., PHX Minerals and Indonesia Energy go up and down completely randomly.

Pair Corralation between PHX Minerals and Indonesia Energy

Considering the 90-day investment horizon PHX Minerals is expected to generate 0.42 times more return on investment than Indonesia Energy. However, PHX Minerals is 2.39 times less risky than Indonesia Energy. It trades about -0.01 of its potential returns per unit of risk. Indonesia Energy is currently generating about -0.4 per unit of risk. If you would invest  327.00  in PHX Minerals on March 10, 2024 and sell it today you would lose (2.00) from holding PHX Minerals or give up 0.61% of portfolio value over 90 days.

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

PHX Minerals  vs.  Indonesia Energy

PHX Minerals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PHX Minerals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical indicators, PHX Minerals may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Indonesia Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Indonesia Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Indonesia Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PHX Minerals and Indonesia Energy

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

The idea behind PHX Minerals and Indonesia Energy 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.