Correlation Between PHX Energy and POSCO Holdings

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

Diversification Opportunities for PHX Energy and POSCO Holdings

0.19

Correlation Coefficient

PHX Energy  POSCO Holdings

Average diversification

The 3 months correlation between PHX and POSCO is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings 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 POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of PHX Energy i.e., PHX Energy and POSCO Holdings go up and down completely randomly.

Pair Corralation between PHX Energy and POSCO Holdings

Assuming the 90 days horizon PHX Energy Services is expected to generate 0.84 times more return on investment than POSCO Holdings. However, PHX Energy Services is 1.19 times less risky than POSCO Holdings. It trades about 0.02 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.24 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.  POSCO Holdings

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.

POSCO Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POSCO Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PHX Energy and POSCO Holdings

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

The idea behind PHX Energy Services and POSCO Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.