Correlation Between Aker Solutions and ChampionX

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

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

Diversification Opportunities for Aker Solutions and ChampionX

-0.59

Correlation Coefficient

Aker Solutions  ChampionX

Excellent diversification

The 3 months correlation between Aker and ChampionX is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aker Solutions ASA and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Aker Solutions 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 Aker Solutions ASA 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 Aker Solutions i.e., Aker Solutions and ChampionX go up and down completely randomly.

Pair Corralation between Aker Solutions and ChampionX

Assuming the 90 days horizon Aker Solutions ASA is expected to generate 5.8 times more return on investment than ChampionX. However, Aker Solutions is 5.8 times more volatile than ChampionX. It trades about 0.13 of its potential returns per unit of risk. ChampionX is currently generating about -0.13 per unit of risk. If you would invest  539.00  in Aker Solutions ASA on October 4, 2024 and sell it today you would earn a total of  461.00  from holding Aker Solutions ASA or generate 85.53% return on investment over 90 days.

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

Aker Solutions ASA  vs.  ChampionX

Aker Solutions ASA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aker Solutions ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Aker Solutions showed 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 inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aker Solutions and ChampionX

The main advantage of trading using opposite Aker Solutions and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Solutions 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 Aker Solutions ASA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.