Correlation Between ChampionX and Dmc Global

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

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

Diversification Opportunities for ChampionX and Dmc Global

0.64

Correlation Coefficient

ChampionX  Dmc Global

Poor diversification

The 3 months correlation between ChampionX and Dmc is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Dmc Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dmc Global 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 Dmc Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dmc Global has no effect on the direction of ChampionX i.e., ChampionX and Dmc Global go up and down completely randomly.

Pair Corralation between ChampionX and Dmc Global

Considering the 90-day investment horizon ChampionX is expected to generate 2.05 times less return on investment than Dmc Global. But when comparing it to its historical volatility, ChampionX is 1.51 times less risky than Dmc Global. It trades about 0.11 of its potential returns per unit of risk. Dmc Global is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  690.00  in Dmc Global on December 25, 2024 and sell it today you would earn a total of  187.00  from holding Dmc Global or generate 27.1% return on investment over 90 days.

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

ChampionX  vs.  Dmc Global

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.

Dmc Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dmc Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dmc Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ChampionX and Dmc Global

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

The idea behind ChampionX and Dmc Global 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.