Correlation Between PHX Energy and Bri-Chem Corp
Can any of the company-specific risk be diversified away by investing in both PHX Energy and Bri-Chem Corp 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 Energy and Bri-Chem Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PHX Energy Services and Bri Chem Corp, you can compare the effects of market volatilities on PHX Energy and Bri-Chem Corp 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 Energy with a short position of Bri-Chem Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHX Energy and Bri-Chem Corp.
Diversification Opportunities for PHX Energy and Bri-Chem Corp
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PHX and Bri-Chem is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and Bri Chem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bri Chem Corp and PHX 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 PHX Energy Services are associated (or correlated) with Bri-Chem Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bri Chem Corp has no effect on the direction of PHX Energy i.e., PHX Energy and Bri-Chem Corp go up and down completely randomly.
Pair Corralation between PHX Energy and Bri-Chem Corp
Assuming the 90 days trading horizon PHX Energy is expected to generate 2.63 times less return on investment than Bri-Chem Corp. But when comparing it to its historical volatility, PHX Energy Services is 4.3 times less risky than Bri-Chem Corp. It trades about 0.06 of its potential returns per unit of risk. Bri Chem Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Bri Chem Corp on September 10, 2024 and sell it today you would earn a total of 0.00 from holding Bri Chem Corp or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
PHX Energy Services vs. Bri Chem Corp
Performance |
Timeline |
PHX Energy Services |
Bri Chem Corp |
PHX Energy and Bri-Chem Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PHX Energy and Bri-Chem Corp
The main advantage of trading using opposite PHX Energy and Bri-Chem Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHX Energy position performs unexpectedly, Bri-Chem Corp 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 Bri-Chem Corp will offset losses from the drop in Bri-Chem Corp's long position.PHX Energy vs. CES Energy Solutions | PHX Energy vs. Total Energy Services | PHX Energy vs. Western Energy Services |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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