Correlation Between ChampionX and 404280AF6

Can any of the company-specific risk be diversified away by investing in both ChampionX and 404280AF6 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 404280AF6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ChampionX and HSBC HLDGS PLC, you can compare the effects of market volatilities on ChampionX and 404280AF6 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 404280AF6. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and 404280AF6.

Diversification Opportunities for ChampionX and 404280AF6

0.17

Correlation Coefficient

ChampionX  404280AF6

Average diversification

The 3 months correlation between ChampionX and 404280AF6 is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and HSBC HLDGS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC HLDGS PLC 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 404280AF6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC HLDGS PLC has no effect on the direction of ChampionX i.e., ChampionX and 404280AF6 go up and down completely randomly.

Pair Corralation between ChampionX and 404280AF6

Considering the 90-day investment horizon ChampionX is expected to generate 2.42 times more return on investment than 404280AF6. However, ChampionX is 2.42 times more volatile than HSBC HLDGS PLC. It trades about 0.04 of its potential returns per unit of risk. HSBC HLDGS PLC is currently generating about -0.15 per unit of risk. If you would invest  2,852  in ChampionX on September 13, 2024 and sell it today you would earn a total of  101.00  from holding ChampionX or generate 3.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.54%
Values	Daily Returns

ChampionX  vs.  HSBC HLDGS PLC

ChampionX

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ChampionX are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, ChampionX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

HSBC HLDGS PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HSBC HLDGS PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HSBC HLDGS PLC investors.

Pair Trading with ChampionX and 404280AF6

The main advantage of trading using opposite ChampionX and 404280AF6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX position performs unexpectedly, 404280AF6 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 404280AF6 will offset losses from the drop in 404280AF6's long position.

The idea behind ChampionX and HSBC HLDGS PLC 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.