Correlation Between ChampionX and Adient PLC

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

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

Diversification Opportunities for ChampionX and Adient PLC

-0.2

Correlation Coefficient

ChampionX  Adient PLC

Good diversification

The 3 months correlation between ChampionX and Adient is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient 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 Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of ChampionX i.e., ChampionX and Adient PLC go up and down completely randomly.

Pair Corralation between ChampionX and Adient PLC

Considering the 90-day investment horizon ChampionX is expected to generate 0.65 times more return on investment than Adient PLC. However, ChampionX is 1.55 times less risky than Adient PLC. It trades about 0.11 of its potential returns per unit of risk. Adient PLC is currently generating about -0.11 per unit of risk. If you would invest  2,661  in ChampionX on December 29, 2024 and sell it today you would earn a total of  354.00  from holding ChampionX or generate 13.3% return on investment over 90 days.

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

ChampionX  vs.  Adient PLC

ChampionX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ChampionX are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical indicators, ChampionX showed solid returns over the last few months and may actually be approaching a breakup point.

Adient PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adient PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ChampionX and Adient PLC

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

The idea behind ChampionX and Adient 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.