Correlation Between Hemisphere Energy and PHX Energy

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

Diversification Opportunities for Hemisphere Energy and PHX Energy

0.87

Correlation Coefficient

Hemisphere Energy  PHX Energy

Very poor diversification

The 3 months correlation between Hemisphere and PHX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy 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 Hemisphere 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 Hemisphere Energy 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 Hemisphere Energy i.e., Hemisphere Energy and PHX Energy go up and down completely randomly.

Pair Corralation between Hemisphere Energy and PHX Energy

Assuming the 90 days horizon Hemisphere Energy is expected to generate 0.92 times more return on investment than PHX Energy. However, Hemisphere Energy is 1.08 times less risky than PHX Energy. It trades about 0.16 of its potential returns per unit of risk. PHX Energy Services is currently generating about 0.12 per unit of risk. If you would invest  169.00  in Hemisphere Energy on April 20, 2025 and sell it today you would earn a total of  26.00  from holding Hemisphere Energy or generate 15.38% return on investment over 90 days.

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

Hemisphere Energy  vs.  PHX Energy Services

Hemisphere Energy

Risk-Adjusted Performance

Good

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

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 9 (%) 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.

Pair Trading with Hemisphere Energy and PHX Energy

The main advantage of trading using opposite Hemisphere Energy and PHX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hemisphere 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 Hemisphere Energy 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..