Correlation Between Gemina Laboratories and PHX Energy

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

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

Diversification Opportunities for Gemina Laboratories and PHX Energy

-0.16

Correlation Coefficient

Gemina Laboratories  PHX Energy

Good diversification

The 3 months correlation between Gemina and PHX is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gemina Laboratories and PHX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Energy Services and Gemina Laboratories 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 Gemina Laboratories are associated (or correlated) with PHX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Energy Services has no effect on the direction of Gemina Laboratories i.e., Gemina Laboratories and PHX Energy go up and down completely randomly.

Pair Corralation between Gemina Laboratories and PHX Energy

Assuming the 90 days horizon Gemina Laboratories is expected to generate 1.52 times more return on investment than PHX Energy. However, Gemina Laboratories is 1.52 times more volatile than PHX Energy Services. It trades about 0.05 of its potential returns per unit of risk. PHX Energy Services is currently generating about 0.03 per unit of risk. If you would invest  22.00  in Gemina Laboratories on September 26, 2024 and sell it today you would earn a total of  24.00  from holding Gemina Laboratories or generate 109.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.74%
Values	Daily Returns

Gemina Laboratories  vs.  PHX Energy Services

Gemina Laboratories

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gemina Laboratories are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, Gemina Laboratories reported solid returns over the last few months and may actually be approaching a breakup point.

PHX Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHX Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, PHX 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 Gemina Laboratories and PHX Energy

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

The idea behind Gemina Laboratories and PHX Energy Services 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.