Correlation Between PHX Energy and ACT Energy

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

Diversification Opportunities for PHX Energy and ACT Energy

-0.15

Correlation Coefficient

PHX Energy  ACT Energy

Good diversification

The 3 months correlation between PHX and ACT is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and ACT Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACT Energy Technologies 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 ACT Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACT Energy Technologies has no effect on the direction of PHX Energy i.e., PHX Energy and ACT Energy go up and down completely randomly.

Pair Corralation between PHX Energy and ACT Energy

Assuming the 90 days trading horizon PHX Energy Services is expected to generate 1.07 times more return on investment than ACT Energy. However, PHX Energy is 1.07 times more volatile than ACT Energy Technologies. It trades about 0.1 of its potential returns per unit of risk. ACT Energy Technologies is currently generating about -0.07 per unit of risk. If you would invest  747.00  in PHX Energy Services on April 23, 2025 and sell it today you would earn a total of  75.00  from holding PHX Energy Services or generate 10.04% return on investment over 90 days.

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

PHX Energy Services  vs.  ACT Energy Technologies

PHX Energy Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PHX Energy Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, PHX Energy may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ACT Energy Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days ACT Energy Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ACT Energy is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PHX Energy and ACT Energy

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

The idea behind PHX Energy Services and ACT Energy Technologies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.