Correlation Between Core Laboratories and ChampionX

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

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

Diversification Opportunities for Core Laboratories and ChampionX

0.43

Correlation Coefficient

Core Laboratories  ChampionX

Very weak diversification

The 3 months correlation between Core and ChampionX is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Core Laboratories NV and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Core Laboratories 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 Core Laboratories NV 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 Core Laboratories i.e., Core Laboratories and ChampionX go up and down completely randomly.

Pair Corralation between Core Laboratories and ChampionX

Considering the 90-day investment horizon Core Laboratories NV is expected to generate 1.51 times more return on investment than ChampionX. However, Core Laboratories is 1.51 times more volatile than ChampionX. It trades about 0.07 of its potential returns per unit of risk. ChampionX is currently generating about 0.0 per unit of risk. If you would invest  1,750  in Core Laboratories NV on September 16, 2024 and sell it today you would earn a total of  194.00  from holding Core Laboratories NV or generate 11.09% return on investment over 90 days.

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

Core Laboratories NV  vs.  ChampionX

Core Laboratories

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Core Laboratories NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Core Laboratories sustained solid returns over the last few months and may actually be approaching a breakup point.

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 newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Core Laboratories and ChampionX

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

The idea behind Core Laboratories NV and ChampionX 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.