Correlation Between ChampionX and Allient

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

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

Diversification Opportunities for ChampionX and Allient

-0.19

Correlation Coefficient

ChampionX  Allient

Good diversification

The 3 months correlation between ChampionX and Allient is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of ChampionX i.e., ChampionX and Allient go up and down completely randomly.

Pair Corralation between ChampionX and Allient

Considering the 90-day investment horizon ChampionX is expected to under-perform the Allient. But the stock apears to be less risky and, when comparing its historical volatility, ChampionX is 1.36 times less risky than Allient. The stock trades about -0.49 of its potential returns per unit of risk. The Allient is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,529  in Allient on September 25, 2024 and sell it today you would lose (143.00) from holding Allient or give up 5.65% of portfolio value over 90 days.

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

ChampionX  vs.  Allient

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 conflicting 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.

Allient

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ChampionX and Allient

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

The idea behind ChampionX and Allient 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..