Correlation Between China Oilfield and ChampionX
Can any of the company-specific risk be diversified away by investing in both China Oilfield and ChampionX 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 China Oilfield and ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Oilfield Services and ChampionX, you can compare the effects of market volatilities on China Oilfield and ChampionX 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 China Oilfield with a short position of ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Oilfield and ChampionX.
Diversification Opportunities for China Oilfield and ChampionX
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and ChampionX is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding China Oilfield Services and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and China Oilfield 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 China Oilfield Services are associated (or correlated) with ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of China Oilfield i.e., China Oilfield and ChampionX go up and down completely randomly.
Pair Corralation between China Oilfield and ChampionX
Assuming the 90 days horizon China Oilfield Services is expected to under-perform the ChampionX. But the stock apears to be less risky and, when comparing its historical volatility, China Oilfield Services is 1.22 times less risky than ChampionX. The stock trades about -0.11 of its potential returns per unit of risk. The ChampionX is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,611 in ChampionX on December 2, 2024 and sell it today you would earn a total of 189.00 from holding ChampionX or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Oilfield Services vs. ChampionX
Performance |
| Timeline |
| China Oilfield Services |
| ChampionX |
China Oilfield and ChampionX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Oilfield and ChampionX
The main advantage of trading using opposite China Oilfield and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Oilfield position performs unexpectedly, ChampionX 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 ChampionX will offset losses from the drop in ChampionX's long position.| China Oilfield vs. Monster Beverage Corp | ||
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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