Correlation Between PHX Energy and Stamper Oil

Can any of the company-specific risk be diversified away by investing in both PHX Energy and Stamper 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 PHX Energy and Stamper Oil 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 Stamper Oil Gas, you can compare the effects of market volatilities on PHX Energy and Stamper 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 PHX Energy with a short position of Stamper Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHX Energy and Stamper Oil.

Diversification Opportunities for PHX Energy and Stamper Oil

0.0

Correlation Coefficient

PHX Energy  Stamper Oil

Pay attention - limited upside

The 3 months correlation between PHX and Stamper is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and Stamper Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stamper Oil Gas 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 Stamper Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stamper Oil Gas has no effect on the direction of PHX Energy i.e., PHX Energy and Stamper Oil go up and down completely randomly.

Pair Corralation between PHX Energy and Stamper Oil

Assuming the 90 days horizon PHX Energy Services is expected to under-perform the Stamper Oil. But the otc stock apears to be less risky and, when comparing its historical volatility, PHX Energy Services is 1.89 times less risky than Stamper Oil. The otc stock trades about -0.31 of its potential returns per unit of risk. The Stamper Oil Gas is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Stamper Oil Gas on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Stamper Oil Gas or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

PHX Energy Services  vs.  Stamper Oil Gas

PHX Energy Services

Risk-Adjusted Performance

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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 latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Stamper Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stamper Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Stamper Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PHX Energy and Stamper Oil

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

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