Correlation Between Apple and ChampionX

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

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

Diversification Opportunities for Apple and ChampionX

-0.71

Correlation Coefficient

Apple  ChampionX

Pay attention - limited upside

The 3 months correlation between Apple and ChampionX is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Apple 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 Apple Inc 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 Apple i.e., Apple and ChampionX go up and down completely randomly.

Pair Corralation between Apple and ChampionX

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the ChampionX. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.31 times less risky than ChampionX. The stock trades about -0.03 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	Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  ChampionX

Apple Inc

Risk-Adjusted Performance

Weak

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

ChampionX

Risk-Adjusted Performance

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ChampionX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Apple and ChampionX

The main advantage of trading using opposite Apple and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.