Correlation Between PHX Energy and ADF

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

Diversification Opportunities for PHX Energy and ADF

0.77

Correlation Coefficient

PHX Energy  ADF

Poor diversification

The 3 months correlation between PHX and ADF is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and ADF Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADF Group 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 ADF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADF Group has no effect on the direction of PHX Energy i.e., PHX Energy and ADF go up and down completely randomly.

Pair Corralation between PHX Energy and ADF

Assuming the 90 days trading horizon PHX Energy is expected to generate 5.63 times less return on investment than ADF. But when comparing it to its historical volatility, PHX Energy Services is 3.79 times less risky than ADF. It trades about 0.1 of its potential returns per unit of risk. ADF Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  613.00  in ADF Group on April 28, 2025 and sell it today you would earn a total of  382.00  from holding ADF Group or generate 62.32% return on investment over 90 days.

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

PHX Energy Services  vs.  ADF Group

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.

ADF Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ADF Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ADF displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PHX Energy and ADF

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

The idea behind PHX Energy Services and ADF Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.