Correlation Between Secure Energy and PHX Energy

Can any of the company-specific risk be diversified away by investing in both Secure Energy and PHX 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 Secure Energy and PHX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Secure Energy Services and PHX Energy Services, you can compare the effects of market volatilities on Secure Energy and PHX 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 Secure Energy with a short position of PHX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secure Energy and PHX Energy.

Diversification Opportunities for Secure Energy and PHX Energy

0.42

Correlation Coefficient

Secure Energy  PHX Energy

Very weak diversification

The 3 months correlation between Secure and PHX is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Secure Energy Services and PHX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Energy Services and Secure 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 Secure Energy Services are associated (or correlated) with PHX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Energy Services has no effect on the direction of Secure Energy i.e., Secure Energy and PHX Energy go up and down completely randomly.

Pair Corralation between Secure Energy and PHX Energy

Assuming the 90 days trading horizon Secure Energy Services is expected to generate 0.94 times more return on investment than PHX Energy. However, Secure Energy Services is 1.06 times less risky than PHX Energy. It trades about 0.15 of its potential returns per unit of risk. PHX Energy Services is currently generating about -0.04 per unit of risk. If you would invest  1,431  in Secure Energy Services on May 15, 2025 and sell it today you would earn a total of  201.00  from holding Secure Energy Services or generate 14.05% return on investment over 90 days.

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

Secure Energy Services  vs.  PHX Energy Services

Secure Energy Services

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Secure Energy Services are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Secure Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

PHX Energy Services

Risk-Adjusted Performance

Weakest

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

Pair Trading with Secure Energy and PHX Energy

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

The idea behind Secure Energy Services and PHX Energy Services 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.