Correlation Between Archrock and ChampionX

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

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

Diversification Opportunities for Archrock and ChampionX

-0.23

Correlation Coefficient

Archrock  ChampionX

Very good diversification

The 3 months correlation between Archrock and ChampionX is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Archrock and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Archrock 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 Archrock 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 Archrock i.e., Archrock and ChampionX go up and down completely randomly.

Pair Corralation between Archrock and ChampionX

Given the investment horizon of 90 days Archrock is expected to generate 1.38 times more return on investment than ChampionX. However, Archrock is 1.38 times more volatile than ChampionX. It trades about 0.01 of its potential returns per unit of risk. ChampionX is currently generating about -0.09 per unit of risk. If you would invest  2,532  in Archrock on October 10, 2024 and sell it today you would earn a total of  4.00  from holding Archrock or generate 0.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Archrock  vs.  ChampionX

Archrock

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Archrock are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Archrock exhibited 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 latest unfluctuating performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Archrock and ChampionX

The main advantage of trading using opposite Archrock and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archrock 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 Archrock 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.