Correlation Between Spindletop and ADX Energy

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

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

Diversification Opportunities for Spindletop and ADX Energy

0.4

Correlation Coefficient

Spindletop  ADX Energy

Very weak diversification

The 3 months correlation between Spindletop and ADX is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Spindletop OG and ADX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADX Energy and Spindletop 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 Spindletop OG are associated (or correlated) with ADX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADX Energy has no effect on the direction of Spindletop i.e., Spindletop and ADX Energy go up and down completely randomly.

Pair Corralation between Spindletop and ADX Energy

Given the investment horizon of 90 days Spindletop OG is expected to under-perform the ADX Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Spindletop OG is 18.86 times less risky than ADX Energy. The pink sheet trades about -0.02 of its potential returns per unit of risk. The ADX Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.73  in ADX Energy on July 14, 2025 and sell it today you would earn a total of  0.77  from holding ADX Energy or generate 44.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

Spindletop OG  vs.  ADX Energy

Spindletop OG

Risk-Adjusted Performance

Weakest

Over the last 90 days Spindletop OG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Spindletop is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ADX Energy

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ADX Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, ADX Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spindletop and ADX Energy

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

The idea behind Spindletop OG and ADX Energy 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.