Correlation Between PHX Energy and Archer

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

Diversification Opportunities for PHX Energy and Archer

0.13

Correlation Coefficient

PHX Energy  Archer

Average diversification

The 3 months correlation between PHX and Archer is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and Archer Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Limited 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 Archer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Limited has no effect on the direction of PHX Energy i.e., PHX Energy and Archer go up and down completely randomly.

Pair Corralation between PHX Energy and Archer

Assuming the 90 days horizon PHX Energy Services is expected to generate 2.74 times more return on investment than Archer. However, PHX Energy is 2.74 times more volatile than Archer Limited. It trades about 0.02 of its potential returns per unit of risk. Archer Limited is currently generating about -0.09 per unit of risk. If you would invest  661.00  in PHX Energy Services on September 16, 2024 and sell it today you would earn a total of  8.00  from holding PHX Energy Services or generate 1.21% return on investment over 90 days.

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

PHX Energy Services  vs.  Archer Limited

PHX Energy Services

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PHX Energy Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Archer Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archer Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Archer 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 Archer

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

The idea behind PHX Energy Services and Archer Limited 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.