Correlation Between ChampionX and Dawson Geophysical

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

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

Diversification Opportunities for ChampionX and Dawson Geophysical

0.02

Correlation Coefficient

ChampionX  Dawson Geophysical

Significant diversification

The 3 months correlation between ChampionX and Dawson is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Dawson Geophysical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawson Geophysical and ChampionX 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 ChampionX are associated (or correlated) with Dawson Geophysical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawson Geophysical has no effect on the direction of ChampionX i.e., ChampionX and Dawson Geophysical go up and down completely randomly.

Pair Corralation between ChampionX and Dawson Geophysical

Considering the 90-day investment horizon ChampionX is expected to under-perform the Dawson Geophysical. But the stock apears to be less risky and, when comparing its historical volatility, ChampionX is 2.41 times less risky than Dawson Geophysical. The stock trades about 0.0 of its potential returns per unit of risk. The Dawson Geophysical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  152.00  in Dawson Geophysical on September 15, 2024 and sell it today you would lose (2.00) from holding Dawson Geophysical or give up 1.32% of portfolio value over 90 days.

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

ChampionX  vs.  Dawson Geophysical

ChampionX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, ChampionX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Dawson Geophysical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dawson Geophysical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Dawson Geophysical is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ChampionX and Dawson Geophysical

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

The idea behind ChampionX and Dawson Geophysical 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..